Silicon Laboratories Inc. (NasdaqGS:SLAB) entered into a definitive agreement to acquire Sigma Designs, Inc. (NasdaqGS:SIGM) for approximately $280 million on December 7, 2017. Under the terms of the transaction, Sigma Designs shareholders will receive $7.05 per share (‘Merger Consideration') in a cash transaction. Pursuant to the agreement, each company option that is outstanding, whether vested or unvested, shall be cancelled by virtue of the merger without any action on the part of the holder thereof in consideration for the right to receive a cash payment, if any with respect thereto equal to the product of (i) the number of vested shares of company common stock, and (ii) the excess, if any, of the Merger Consideration over the exercise price per share of company common stock subject to such company option as of immediately prior to the effective time. Each company restricted stock unit that is outstanding, whether vested or unvested, shall be cancelled by virtue of the merger without any action on the part of the holder thereof in consideration for the right to receive a cash payment, equal to the product of (i) the number of shares of company common stock remaining subject to and not previously issued in settlement of such restricted stock units and (ii) the Merger Consideration. In the event that certain of the closing conditions are not met, the parties have agreed that Sigma Designs would instead sell its Z-Wave business to Silicon Laboratories for $240 million, contingent upon approval by Sigma Designs' stockholders. Sigma Designs is in active discussions with prospective buyers to divest its Media Connectivity business and also plans to wind down or divest its Smart TV business (divestiture and restructuring). Upon termination of the merger agreement, under specified circumstances, Sigma Designs may be required to pay Silicon Laboratories a termination fee of $11.5 million.

The transaction is subject to the approval by the shareholders of Sigma Designs, expiration or termination of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, disposition of Sigma's TV Business, Sigma having cash and cash equivalents of at least $40 million the Company's accounts located anywhere in the world, net of any taxes and charges that would be required to be paid in order to repatriate such cash to the United States and other customary closing conditions. The Boards of Directors of both companies have unanimously approved the transaction. The transaction is expected to close in the first calendar quarter of 2018. Subsequent to above mentioned divestiture and restructuring, Silicon Laboratories expects the transaction to be accretive on a non-GAAP basis.

Morgan Stanley & Co. LLC acted as financial advisor to Silicon Laboratories and Deutsche Bank acted as financial advisor to Sigma Designs. James J. Masetti, Cindy V. Schlaefer, George A. Willman, Marcia L. Pope, Matthew K. Desharnais, Mediha Ali, Omar Bailony and Matthew Ryan of Pillsbury Winthrop Shaw Pittman LLP acted as the legal advisors to Sigma Designs in this transaction. Philip Russell of DLA Piper LLP (US) acted as the legal advisor to Silicon Laboratories in this transaction.

Silicon Laboratories Inc. (NasdaqGS:SLAB) cancelled the acquisition of Sigma Designs, Inc. (NasdaqGS:SIGM) on January 23, 2018. The initial closing conditions in the definitive agreement are not being satisfied due to which Silicon and Sigma will move forward with the sale of Z-Wave business.