15 October 2021
Sivers Semiconductors to acquire 5G mmWave firm MixComm for $135-155m
Sivers Semiconductors AB of Kista, Sweden (which supplies chips and integrated modules) has agreed to acquire fabless semiconductor company MixComm Inc of Chatham, NJ, USA (with design centres in Oregon and California) for an initial purchase price of $135m (about SEK1173m) on a debt-free basis, to be paid through a combination of $22.5m (SEK196m) in cash and $112.5m (SEK978m) in 39,335,664 newly issued Sivers shares (based on the 10-day volume-weighted average price of a Sivers share prior to signing of the agreement).
In addition, there is a performance-based earn-out of up to $20m (SEK174m) to be paid in new Sivers shares, based on the same share exchange ratio, tied to the achievement of certain commercial customer milestones within nine months from signing. The total stock and cash deal values MixComm at $135-155m (SEK1173-1347m).
Sivers now intends to effect a directed share issue to fund the cash consideration, transaction fees and expenses, and the ongoing working capital needs of the combined business.
Sivers has its two business areas: Wireless develops RF chips and antennas for advanced 5G systems for data and telecoms networks; Photonics develops and manufactures semiconductor-based optical products for optical fiber networks, sensors and optical fiber communications (Li-Fi).
MixComm is a millimeter-wave (mmWave) company developing solutions for emerging wireless applications and markets. In 2020, the firm introduced its first of a portfolio of mmWave products that deliver integration for 5G infrastructure and satellite communication.
Following completion of the acquisition, the enlarged Sivers group will have a broad joint IP portfolio of RFIC/BFIC (radio frequency/beam-forming integrated circuits) chipsets in a wide variety of mmWave semiconductor technologies, including silicon germanium (SiGe) and RF silicon-on-insulator (RF-SOI). This IP portfolio will span a broad spectrum of possible mmWave use cases such as unlicensed 5G, licensed 5G infrastructure, fixed wireless access (FWA) customer premises equipment (CPE) and satellite communications (SATCOM). The acquisition also enables the combined businesses to bring MixComm’s industry-first Antenna-in-Package technology to all mmWave applications.
Through the combination, Sivers will increase its total number of design wins by about 70% to 44, as well as double the number of design wins expected to enter volume production within the next 12 months from eight to 16. MixComm currently has 18 design wins, including with a major tier-1 5G infrastructure customer, and a significant pipeline of potential new customer opportunities. MixComm has about 20 patents currently filed, granted or exclusively licensed and reported $1.3m in revenue in first-half 2021, with a strong sales pipeline for the coming year. MixComm estimates that its top three customers could generate about $70m in aggregate revenue for 2022-2024, and an incremental $70m in revenue from the tier-1 customer in 2025-2026. The acquisition is expected to drive synergies across both revenue and product development through the significant level of commercial and technical complementarity, as well as the broader geographic coverage.
Driven by the exponential growth of the wireless connectivity and telecoms sectors, the semiconductor industry is undergoing a significant technology-based transformation, notes Sivers. This is supporting the deployment of new technologies such as the implementation of 5G connectivity, providing opportunities to reach new levels of efficiency and customer value.
MixComm was founded in 2017 based on more than 10 years of development at Columbia University led by Dr. Krishnaswamy (co-founder & chief technology officer) through externally funded research projects totalling $94m across all projects and participants). The firm is an active US participant in the 5G BFIC (repeaters/base stations), SATCOM and radar verticals. Most employees hold a PhD, and the company is the only mmWave company selected to join the 5G Open Innovation Lab founded by T-Mobile and Intel. The flagship BFIC SUMMIT 2629 was the recipient of numerous ‘Best Products’ citations in 2020, including ‘The Broadband Innovation of the Year’ from the Mobile Breakthrough Awards. MixComm has established partnerships with minority investor GlobalFoundries for RF-SOI fabrication, packaging and test services, and with Richardson RFPD for distribution and logistics globally. MixComm is currently majority owned by its founders, employees and US-based Kairos Ventures (which identifies and commercializes scientific discoveries into viable businesses). Following the closing of the transaction, Kairos will become a significant shareholder of Sivers.
Completion of the acquisition is conditional upon (among other things) approval at an Extraordinary General Meeting (EGM) of Sivers to authorize the board of directors to issue the consideration shares as well as regulatory approval by CFIUS (the Committee on Foreign Investment in the United States). The EGM is expected to be held in first-half November. Shareholders representing about 41% of the current outstanding voting rights of Sivers have committed, or indicated intention, to vote in favour of the transaction. The EGM will also propose the appointment of Kairos Ventures’ chief operating & financial officer Todd Thomson to Sivers’ board upon completion of the acquisition.
Completion is expected to take place by mid-Q1/2022 (subject to the fulfilment of all conditions). The consideration shares would represent about 29% of Sivers’ current outstanding share capital (assuming that the earn-out is paid in full). The shares issued to the sellers will be subject to a lock-up of 12 months for 50% of the consideration shares and 18 months for the remaining 50%.
“MixComm has in a short time period been able to build a very impressive customer list as well as sales funnel,” comments Sivers’ group CEO Anders Storm. “MixComm and Sivers have the same philosophy when it comes to building partnerships within the mmWave eco-system and, by adding these eco-systems together, we will create an even greater combined entity,” he adds.
“Sivers and MixComm share a vision for mmWave’s impact and potential. Combining with Sivers will accelerate that impact and amplify that potential,” reckons MixComm’s CEO Mike Noonen.
“In Sivers, we see a company that has the same philosophy as MixComm when it comes to technical excellence, out-of-the box thinking, and customer partnerships and service,” says MixComm’s co-founder & CTO Dr Harish Krishnaswamy. “The combined entity will not only match but, through our synergies, significantly exceed the exponential growth that the individual entities are currently seeing,” he expects.