Microwave and semiconductor devices supplier M/A-COM Technology Solutions Holdings (MACOM) has inked a pact to divest its automotive business to safety systems firm Autoliv in a deal valued at $100m.
MACOM's automotive operations accounted for its 18% consolidated revenue during the second quarter ending April 3 this year.
The consideration for MACOM's automotive wing has been agreed upon $100m in cash, which is contingent upon customary working capital and other adjustments. It is likely to get another $30m in cash with reference to revenue-based earn-out targets through 2019.
The deal is expected to close by this year-end. Jefferies and Perkins Coie discharged their responsibilities as financial advisor and legal counsel, respectively.
MACOM President and Chief Executive Officer John Croteau said: "The divesture of our automotive business will enable MACOM to realize its full potential as a pure-play high-performance analog company and demonstrates our confidence in achieving high growth rates in our retained core businesses.
"We anticipate our optical and laser businesses will continue to outperform, quickly contributing to consolidated MACOM earnings and cash flow consistent with our pre-divestment expectations for our business as a whole, even without the automotive business in the portfolio.
"MACOM's operating margin has expanded to the point that the automotive business was no longer accretive to our operating model, and therefore not consistent with our long-term strategic vision from both a growth and profitability perspective. We expect this divestiture will significantly accelerate MACOM's achievement of its target operating model of 60% non-GAAP gross margin and 30% non-GAAP operating margin."
Based in Massachusetts, US, MACOM sells its products to consumers from high-speed optical, satellite, radar, wired and wireless networks, industrial, medical, and mobile devices.
