Item 1.01. Entry Into a Material Definitive Agreement.
On December 18, 2019, Synaptics Incorporated (the "Company") entered into an
Asset Purchase Agreement (the "Purchase Agreement") by and among the Company and
Creative Legend Investments Ltd. ("Buyer"). Pursuant to the Purchase Agreement,
the Company will sell to Buyer, and Buyer will purchase from the Company, the
assets of the Company's Asia-based, single-chip LCD Touch Controller and Display
Driver Integration business line for LCD mobile displays (the "Business").
Subject to certain post-closing adjustments and indemnification obligations, the
aggregate consideration payable by Buyer to the Company will be (i) $120 million
in cash, (ii) the dollar value of specified Business inventory, at a purchase
price of standard cost plus 5%, in cash, and (iii) the assumption of certain
liabilities, as set forth in the Purchase Agreement. The transaction is expected
to close in the second calendar quarter of 2020, subject to satisfaction of
certain closing conditions. In the event all closing conditions shall be
satisfied other than certain specified regulatory approvals on or prior to
April 15, 2020, Buyer shall be obligated to deposit $50 million in cash to an
escrow account, to be released to the Company or Buyer upon closing of the
transaction or termination of the Purchase Agreement. The Purchase Agreement may
be assigned by Buyer prior to closing to certain permitted assignees agreed to
by the Company and Buyer.
In connection with the entry into the Purchase Agreement, the Company
concurrently entered into a limited guarantee agreement (the "Limited
Guarantee") with Hua-Capital Cayman, L.P. (the "Guarantor"), which provides for
a limited guarantee by Guarantor of Buyer's obligations under the Purchase
Agreement. The Limited Guarantee will terminate upon any assignment of the
Purchase Agreement by Buyer to certain permitted assignees agreed to by the
Company and Buyer.
The Purchase Agreement contains customary representations, warranties and
covenants of the parties. The representations and warranties contained in the
Purchase Agreement were made solely for purposes of the Purchase Agreement,
subject to important qualifications and limitations, and were made solely for
the benefit of the parties to the Purchase Agreement and may not have been
intended to be statements of fact but, rather, as a method of allocating risk
and governing the contractual rights and relationships among the parties to the
Purchase Agreement. Accordingly, the representations and warranties contained in
the Purchase Agreement should not be relied upon as factual information at the
time they were made or otherwise.
Each party's obligation to consummate the transaction pursuant to the Purchase
Agreement is subject to a number of conditions as set forth therein, including,
among others, (i) subject to certain exceptions, the accuracy of the
representations and warranties of the parties; (ii) performance in all material
respects by each of the parties of its obligations and covenants;
(iii) procurement of certain specified third-party consents; (iv) absence of any
Material Adverse Effect with respect to the Business; and (v) antitrust
regulatory approvals in the People's Republic of China.
The Purchase Agreement also contains certain termination rights for both the
Company and Buyer. Promptly after the execution of the Purchase Agreement, Buyer
is required to deposit $5 million in an escrow account to satisfy Buyer's
termination fee obligations that may become payable to the Company in the event
of certain termination events specified in the Purchase Agreement.
Pursuant to the Purchase Agreement, the Company has also agreed, for a period of
five years following the closing date, not to compete with certain business
activities currently conducted by the Business, subject to certain exceptions.
The Purchase Agreement also provides that the parties will enter into a
customary transition services agreement at closing, and the Company and Buyer
will also enter into license agreements at closing between each party providing
a royalty-free license of certain intellectual property used in the Business.
The foregoing description of the Purchase Agreement and Limited Guarantee does
not purport to be complete and is qualified in its entirety by reference to the
Purchase Agreement and Limited Guarantee, which are expected to be filed with
the Company's next quarterly report in accordance with the rules and regulations
of the Securities and Exchange Commission.
Item 7.01. Regulation FD Disclosure.
On December 19, 2019, the Company issued a press release regarding the entry
into the Purchase Agreement. The press release is furnished herewith as Exhibit
99.1 and is incorporated herein by reference.
The information contained in this Item 7.01 and in the accompanying Exhibit 99.1
shall not be deemed filed for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in
any filing under the Exchange Act or the Securities Act of 1933, as amended,
whether made before or after the date hereof, except as shall be expressly set
forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
99.1 Press release from Synaptics Incorporated, dated December 19,
2019, titled Synaptics Announces Divestiture of Mobile LCD TDDI
Business to Hua Capital
104 Cover Page Interactive Data File (embedded within the Inline XBRL
This Current Report on Form 8-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of
the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements include, without limitation, statements about the
proposed divestment by the Company of the Business and expectations regarding
the completion thereof. Forward-looking statements involve uncertainties, risks,
assumptions and contingencies, many of which are outside the Company's control
that may cause actual results to differ materially from those described in or
implied by any forward-looking statements. All forward-looking statements are
based on currently available information and speak only as of the date on which
they are made. The Company assumes no obligation to update any forward-looking
statement made in this Current Report that becomes untrue because of subsequent
events, new information or otherwise, except to the extent it is required to do
so in connection with its ongoing requirements under Federal securities laws.
For a further discussion of factors that could cause the Company's future
results to differ materially from any forward-looking statements, see the
section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for
the year ended June 29, 2019 and other risks described in documents filed by the
Company from time to time with the Securities and Exchange Commission.
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