Notable Mergers and Acquisitions of the Day 07/12: (SPRD) (IGOI) (QIHU)
* Tsinghua Unigroup Ltd., an operating subsidiary of Tsinghua Holdings Co. Ltd., a solely state-owned limited liability corporation funded by Tsinghua University in China, and Spreadtrum Communications, Inc. (Nasdaq: SPRD) jointly announced that they have entered into a definitive merger agreement under which Tsinghua Unigroup will acquire all of the outstanding Ordinary Shares of Spreadtrum for US$31.00 per American Depositary Share (or US$10.33 per Ordinary Share, each American Depositary Share representing three Ordinary Shares). The merger values Spreadtrum's equity at approximately US$1.78 billion, on a fully diluted basis. The transaction is subject to approval by the shareholders of Spreadtrum, and antitrust and other regulatory approvals, and is not subject to any financing condition.
The Company's Board of Directors unanimously approved the merger agreement and recommends that the Company's shareholders vote to approve the merger agreement. Spreadtrum expects to hold a special meeting of its shareholders to consider and act upon the proposed transaction as promptly as practicable. Details regarding the record date for, and the date, time and place of, the special meetings will be included in a press release when finalized.
With annual revenues of approximately US$720 million as of 2012, Spreadtrum is a fabless semiconductor company that develops mobile chipset platforms for smartphones, feature phones and other consumer electronics products, supporting 2G, 3G and 4G wireless communications standards. Spreadtrum's solutions combine its highly integrated, power-efficient chipsets with customizable software and reference designs in a complete turnkey platform, enabling customers to achieve faster design cycles with a lower development cost. Spreadtrum's customers include global and China-based manufacturers developing mobile products for consumers in China and emerging markets around the world.
Morgan Stanley Asia Limited rendered a fairness opinion to the Board of Directors of Spreadtrum. Fenwick & West LLP is serving as legal advisor to Spreadtrum, and Morrison & Foerster LLP is serving as legal advisor to Tsinghua Unigroup.
* iGO, Inc. (Nasdaq: IGOI) announced today that it has entered into a definitive Stock Purchase and Sale Agreement with Steel Excel Inc. (OTC: SXCL) pursuant to which Steel will commence a cash tender offer to purchase up to 44.0% of the outstanding shares of the Company's common stock on a fully-diluted basis at a price of $3.95 per share. The offer price represents a 71.7% premium to the Company's closing stock price on the NASDAQ of $2.30 on July 10, 2013. The Sale Agreement and the transactions contemplated thereby have been unanimously approved by the boards of directors of both companies.
Steel's obligation to complete the tender offer is subject to the tender of at least 30.0% of the outstanding shares of the Company's common stock on a fully-diluted basis. If at least 30.0%, but less than 44.0%, of the outstanding shares of the Company's common stock on a fully-diluted basis are tendered in the tender offer, Steel is obligated to purchase from the Company newly issued shares of the Company's common stock at the same price as paid in the tender offer so that Steel's interest in the Company following such transaction will constitute the 44.0% threshold. Upon completion of the tender offer, Steel will be able to appoint two of the Company's four directors. Further, a new president and chief executive officer will be appointed to replace Michael D. Heil, who currently holds the position.
The board of directors of the Company has unanimously agreed to recommend that the Company's stockholders tender their shares to Steel in the tender offer, subject to their fiduciary duties. Adage Capital Partners, L.P., one of the Company's principal stockholders, owning approximately 21.0% of the Company's outstanding common stock, has entered into a tender and voting agreement with Steel committing to tender all of its shares of the Company's common stock in the tender offer subject to proration for tenders by other stockholders.
* Qihoo 360 (NYSE: QIHU) is lower early amid speculation that the company might be in the works to snatch-up Sohu's (Nasdaq: SOHU) Sogou search engine.
TheNextWeb says that Qihoo might pay $1.4 billion for Sogou with an announcement expected soon. Qihoo CEO Zhou Hongyi flew to the U.S. recently to meet with Sohu CFO Carol Yu. Sogou CEO Wang Xiaochuan wasn't to be at the meetings and will remain at his position upon completion of any merger.
The move would put together China's second and third largest web search engines, a move to unseat de facto market leader Baidu (Nasdaq: BIDU). While Qihoo has about 15.3 percent of China's web traffic, Biadu has somewhere around 69.4 percent. Baidu's share spiked to around 80 percent after Google (Nasdaq: GOOG) pulled out of the country a few years back.
Sogou's Wang posted on Sina (Nasdaq: SINA) Weibo recently, denying the rumor and saying it was the fourth time such a rumor arose.
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