ON Semiconductor Corporation announced that it has extended its previously announced tender offer to purchase all of the outstanding shares of common stock of Fairchild Semiconductor International Inc. for $20.00 per share in cash pending the satisfaction of the conditions to the Offer set forth in the merger agreement entered into on November 18, 2015 between ON Semiconductor and Fairchild. The Offer will now expire one minute following 11:59 p.m., New York City time, on March 31, 2016, unless further extended as required or permitted by the merger agreement.
Also as part of the review process, ON Semiconductor has indicated to the U.S. Federal Trade Commission (FTC) its willingness to dispose of ON Semiconductor’s ignition IGBT business, which business generated less than $25 million in revenue during fiscal year 2015, and has initiated a process to discuss the sale of the business with potential purchasers.
In addition, ON Semiconductor announced that it has finalized pricing and allocations of new secured debt facilities. The secured debt facilities consist of $2.2 billion of first lien term loans and a $600 million revolving credit facility. At acquisition closing, ON Semiconductor expects to draw $200 million from the revolving credit facility. ON Semiconductor intends to use the proceeds of the secured debt facilities, together with cash-on-hand, to (i) pay the cash consideration in connection with the acquisition of Fairchild, (ii) effect the repayment of any amounts under Fairchild’s outstanding credit facility, as well as certain existing indebtedness of ON Semiconductor, and (iii) pay fees and expenses related to the transaction. Additionally the revolving credit facility will be used for general corporate purposes.
During the marketing period of the secured debt facilities, the first lien term loan and revolving credit facility both were upsized due to strong investor demand. The first lien term loan is due in 2023 and includes a 101 soft-call provision for 12 months. The first lien term loan will bear interest at a rate of LIBOR plus 4.50% per annum, subject to a floor of 0.75% per annum and with an issuance price of 98.50%. At acquisition close, ON Semiconductor will have pro forma net leverage of 3.2x including synergies and intends to decrease net leverage to under 2.0x within two years after closing the Fairchild acquisition.
All other terms and conditions of the Offer remain unchanged. Computershare Trust Company, N.A., the depositary for the Offer, has advised ON Semiconductor that as of the close of business, New York City time on March 17, 2016, approximately 21,760,234 shares of common stock of Fairchild (not including 730,708 shares tendered by notice of guaranteed delivery for which shares have not yet been delivered) have been validly tendered and not properly withdrawn pursuant to the Offer, representing approximately 19.2% of the outstanding shares of common stock of Fairchild.
Pending satisfaction of the conditions to the Offer, the merger agreement requires successive 10-business day extensions of the Offer, and ON Semiconductor currently intends to continue making such successive extensions, subject to the other terms and conditions of the merger agreement. This press release is being issued under applicable securities laws in order to notify Fairchild’s stockholders of the extension.
In addition, ON Semiconductor also announced that it had received clearance related to the completion of the Offer from each of the applicable antitrust authorities in Germany and Japan. Accordingly, the conditions to the Offer relating to the termination or expiration of required waiting periods, and receipt of required approvals, under the applicable antitrust laws of Germany and Japan have been satisfied.
Also, in connection with its ongoing discussions with the FTC ON Semiconductor announced that, on March 17, 2016, it received a request for additional information (Second Request) related to necessary regulatory approvals in connection with the Offer. The Second Request is a standard part of the regulatory review process by the FTC. The effect of the Second Request is to extend the waiting period imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, until 10 days after ON Semiconductor has substantially complied with the Second Request, unless that period is extended voluntarily by ON Semiconductor or terminated sooner by the FTC. The Second Request relates primarily to ON Semiconductor’s and Fairchild’s ignition IGBT businesses.
As indicated above, ON Semiconductor has indicated to the FTC its willingness to dispose of ON Semiconductor’s ignition IGBT business, which business generated less than $25 million in revenue during fiscal year 2015, and has initiated a process to discuss the sale of the business with potential purchasers. Based on ON Semiconductor’s productive discussions with the FTC to date, ON Semiconductor anticipates disposing of its ignition IGBT business to satisfy the FTC’s remaining concerns; however, no assurance can be made that such disposition will occur. ON Semiconductor and Fairchild will continue to engage closely and cooperatively with the FTC as it finalizes its review of the proposed transaction and both ON Semiconductor and Fairchild are confident that the necessary regulatory approval will be obtained.
