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Montage Technology Ups Breakup Fee in Revised Offer for Pericom.

M2 EQUITYBITES-November 6, 2015-Montage Technology Ups Breakup Fee in Revised Offer for Pericom


6 November 2015 - US-based chipmaker Montage Technology Group Ltd. Montage Technology Group Ltd. has sent to Pericom Semiconductor Corp. (NASDAQ: PSEM) a revised binding offer and merger agreement with significantly enhanced terms to acquire all of the outstanding shares of Pericom.

Montage believes that its USD 18.50 per share cash offer is clearly superior to the USD 17.00 per share Diodes Inc. proposal. Montage's USD 18.50 offer is 9% higher than a competing proposal from US chipmaker Diodes and 52% higher than Pericom's unaffected closing price on 2 September 2015.

With the latest revision, Montage said it has now doubled the reverse breakup fee due Pericom in the event the deal fails. The company said it is also assuming all risk with regard to all regulatory approvals and clearances.

On 3 September, US-based discrete, logic and analog semiconductor product maker Diodes Inc. (NASDAQ: DIOD) and Pericom Semiconductor Corp. (NASDAQ: PSEM) entered into deal that provides for the acquisition of Pericom by Diodes.

At the effective date of the merger, each share of Pericom will be converted into the right to receive USD 17.00 in cash, without interest.

The aggregate consideration will be approximately USD 400m. The purchase price represents a 40% premium to the closing price on September 2, 2015.

Montage put it its own USD 18.50 per share cash offer for Pericom on 30 September. That offer values the company at USD 430m.

However, the boards of Diodes and Pericom companies have approved their transaction, which is still subject to approval by Pericom's shareholders, as well as other customary closing conditions and regulatory approvals.

Montage has now enhanced its proposal increasing the reverse break-up fee. Montage has doubled its proposed reverse break-up fee from USD 21.5m to USD 43m, representing 10% of the transaction value.

The reverse break-up fee would be payable to Pericom should Montage fail to obtain required regulatory approval or financing for the transaction. Montage has committed to depositing the reverse break-up fee into an escrow account with Citibank in New York.

Montage also said its offer is no longer conditioned on any regulatory closing conditions, and has removed closing conditions relating to antitrust, Taiwan and the Committee on Foreign Investment in the United States regulatory approvals and clearances.

Therefore, Montage is assuming all risk with regard to all regulatory approvals and clearances.

Montage's offer is not subject to any financing conditions and the company has previously agreed to "hell or high water" obligations. Montage also remains willing to pay the Diodes break-up fee of USD 15m, preserving the full 9% premium for Pericom shareholders.

The company said it will file an investor presentation with the Securities and Exchange Commission in connection with its offer to acquire Pericom.

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Publication:M2 EquityBites (EQB)
Date:Nov 6, 2015
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