Cohu Inc. (NasdaqGS:COHU) entered into an agreement to acquire Xcerra Corporation (NasdaqGS:XCRA) for approximately $800 million on May 7, 2018. Under the terms, each share of Xcerra's common stock will be entitled to receive $9 in cash per share and 0.2109 of a share of Cohu common stock. Each Xcerra restricted stock unit that is outstanding and either vests at the effective time or is held by a non-employee member of the Board shall receive, an amount in cash equal to $9 in cash and 0.2109 of a share of Cohu common stock. Each Xcerra's restricted stock unit that is outstanding and unvested shall be assumed by Cohu and shall be converted into a Cohu restricted stock unit award equal to the product of the number of shares of Xcerra common stock represented by such unvested restricted stock unit multiplied by the sum 0.2109 of share of Cohu common stock plus the quotient of $9 in cash divided by the volume weighted average of the trading prices of Cohu common stock on each of the three consecutive trading days ending on the trading day that is one trading day prior to the date of the closing of the merger. The consideration is subject to adjustment. The purchase price was 65% payable in cash and 35% payable in Cohu common stock. Post-acquisition, Xcerra shareholders are expected to own approximately 28% of the combined company. After the close of the transaction, Xcerra will no longer be a public company and its shares will no longer trade on the NASDAQ stock exchange. Concurrently with the execution of the merger agreement, Cohu delivered to Xcerra executed debt commitment letter and related term sheets from the lenders for a senior secured term loan facility $350 million for the purpose of funding the transactions. Cohu intends to fund the cash payable to Xcerra shareholders with a combination of cash from combined balance sheets of Cohu and Xcerra and, approximately $350 million in debt financing via executed debt commitment letter. Upon completion of the transaction, Xcerra will operate as a wholly owned subsidiary of Cohu. In case of termination by Xcerra, Xcerra will pay a termination fee of $22.8 million to Cohu. In case of termination of the transaction, Cohu may be required to pay a fee of $22.8 million and in certain circumstances including financing failure a termination fee of $45 million.

Post-acquisition, Luis Müller will remain President and Chief Executive Officer and lead the combined company, and Jeff Jones will continue to serve as Vice-President of finance and Chief Financial Officer. Dave Tacelli, Xcerra's President and Chief Executive Officer and Mark Gallenberger, Xcerra's Senior Vice President, Chief Financial Officer and Chief Operating Officer, will transition their responsibilities to Luis Müller and Jeff Jones. Two members of Xcerra's Board of Directors will join Cohu's Board upon the closing of the transaction. Headquarters for Cohu will continue to be located in Poway. The transaction is subject to conditions including approval by majority of shareholders of both Cohu and Xcerra, expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and receipt of customary antitrust clearances in Germany, effectiveness of the required registration statement on Form S-4, authorization for listing of the shares of Cohu common stock issuable in the transaction on the Nasdaq Global Market and other customary closing conditions. The transaction has been unanimously approved by the Boards of Directors of both companies. On July 16, 2018, Germany Federal Cartel Office granted clearance for the acquisition. On July 26, 2018, the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. As on August 30, 2018, the transaction received approval from the shareholders of Cohu and Xcerra. As of October 1, 2018, Xcerra Corporation shares were delisted. The transaction is expected to close in the second half of 2018. As per an announcement made on August 3, 2018, transaction is expected to close early in the fourth quarter of 2018. On September 5, 2018, Cohu announced that the transaction is expected to close before October 15, 2018. The transaction is expected to be immediately accretive to non-GAAP earnings per share, diversifies revenue base and generate over $20 million of annual run-rate cost synergies within 2 years of closing, excluding stock-based compensation and other charges.

Deutsche Bank Securities Inc. acted as financial advisor and Paul J. Shim, Chris Condlin, Charlie Allen, Roberto Cugnasco, Gaia Goffe, Duane McLaughlin, Shirley Lo, Augustas Baliulis, Arthur Kohn, Kathleen Emberger, Alexander Eaton, Michael Brems, Falko Maurer, Roman van den Busch, Daniel Ilan, Brendan J. Cohen, Meyer Fedida, David Stuckey, Jeremy Calsyn, Kenneth Reinker, James Hunsberger, Drew Navikas. Nicolas Teijeiro, Julia Kang and Evan McQuiston of Cleary Gottlieb Steen & Hamilton LLP acted as legal advisor to Cohu. Tad Freese and Chad Rolston of Latham & Watkins LLP acted as legal advisor and Cowen and Company, LLC acted as financial advisor to Xcerra Corporation. Computershare Investor Services LLC acted as the transfer agent for Xcerra on the transaction. Deutsche Bank Securities shall be paid a fee of $4 million and Cowen and Company shall be paid a fee of $8 million. Okapi Partners LLC acted as the proxy solicitor for Cohu and will be paid a fee of $18,000 and The Proxy Advisory Group, LLC acted as the proxy solicitor for Xcerra and will be paid a fee of $20,000. David Schwartzbaum, Lauren Shor, Valerie Campbell of Convington and Burling LLP acted as a legal advisor to Cowen and Company LLC.

Cohu Inc. (NasdaqGS:COHU) completed the acquisition of Xcerra Corporation (NasdaqGS:XCRA) on October 1, 2018. In connection with the consummation of the merger, each of Roger G. Blethen, David G. Tacelli, Mark S. Ain, Roger J. Maggs, Jorge Titinger and Bruce R. Wright ceased to be directors of Xcerra and each of Jeffrey D. Jones, Luis A. Müller and Thomas D. Kampfer became directors. David G. Tacelli, Xcerra's President and Chief Executive Officer, resigned from his position as an officer and Mark J. Gallenberger, the Company's Chief Operating Officer and Chief Financial Officer, resigned from his position as an officer. Luis A. Müller was appointed as President and Jeffrey D. Jones as Vice President, Finance, Treasurer and Chief Financial Officer of Xcerra.