Adesto Technologies Corporation (NASDAQ:IOTS) (‘Adesto') entered into a definitive agreement to acquire Echelon Corporation (NASDAQ:ELON) from Royce & Associates, LP, Renaissance Technologies Corp., Enel Investment Holding B.V. and other shareholders for $43.3 million on June 28, 2018. The purchase consideration is $8.5 per share and represents a total equity value of $44.1 million and a total enterprise value of about $30 million after accounting for Echelon's cash and investments on its balance sheet at March 31, 2018, as well as expected transaction expenses of approximately $4 million. All the outstanding restricted stock units will be exchanged for a consideration of $8.5 per unit and options will be exchanged for the excess of the per share consideration of $8.5 million over the exercise price.

Adesto expects to finance the transaction through a combination of existing cash and equity and/or debt. As of July 10, 2018, the transaction will be financed through $40.2 million proceeds of the offering, along with any new borrowing and cash on Echelon's balance sheet. Echelon will become a business unit within Adesto and will operate as a wholly owned subsidiary of Adesto following the transaction. As a result of the merger, Echelon will cease to be a publicly traded company. Echelon may be required to pay a fee of $1.5 million while Adesto may be required to pay a fee of $4.4 million in the event of termination of the transaction under certain circumstances.

The Directors and Officers of Echelon will continue to operate in their respective positions until their respective successors are duly elected. The transaction is subject to customary closing conditions, including approval by holders of a majority of Echelon's outstanding common stock. The merger is not conditioned upon receipt of financing. The Echelon Board unanimously approved the transaction and recommended shareholders to vote in favor of the merger. The Board of Directors of Adesto has approved and adopted the merger agreement. The acquisition is not subject to approval by Adesto's stockholders. No regulatory approvals are expected to be required in connection with the merger. The Directors and Executive Officers of Echelon holding 13.7% of common stock of Echelon have agreed to vote their shares in favor of the merger. The special meeting of Echelon shareholders to approve the transaction will be held on September 13, 2018.

A Special Meeting of Stockholders of Echelon held on September 13, 2018, approved the proposal to adopt the agreement and plan of merger and on a non-binding, advisory basis, the compensation that will or may become payable by Echelon Corporation to its named executive officers in connection with the merger. Adesto expects the transaction to close in the third calendar quarter of 2018. As of July 16, 2018, the transaction is expected to close in 2018. The purchase is expected to be accretive to EBITDA and non-GAAP earnings of Adesto within the first 12 months.

Canaccord Genuity acted as financial advisor to Adesto. Mark A. Leahy, Bomi Lee, Ryan M. McRobert, Lisa Richards, Michael Farn, Chris Joslyn, Vanessa Katz, Blake Martell, Elizabeth Gartland, Hans Andersson, Will Skinner and David K. Michaels of Fenwick and West LLP acted as legal advisors to Adesto. Piper Jaffray & Co. served as financial advisor to Echelon. Larry W. Sonsini, Bradley L. Finkelstein, Yingting Zhang, Stephen Horton, Joan Moses, Madeleine Boshart, Mark Cornillez-Ty, Matt Gorman, Myra Sutanto Shen, Manja Sachet, Khurram Awan, Matt Staples, Susan Reinstra, Sean Wilkinson, Martin Sul, Anne Seymour, Larry Perrone and Douglas K. Schnell of Wilson Sonsini Goodrich & Rosati, Professional Corporation acted as legal advisors to Echelon. The Proxy Advisory Group, LLC acted as information agent to Echelon and will receive $0.04 million as advisory fee. Echelon will pay Piper Jaffray a fee of approximately $1.9 million for its services, the principal portion of which is contingent upon consummation of the merger, except for $0.5 million of such fee, which has been earned by Piper Jaffray for rendering its fairness opinion. Computershare Inc. acted as transfer agent for Echelon.