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RF Micro Devices, TriQuint Semiconductor To Merge In All-stock Deal

RF Micro Devices, Inc. (RFMD) and TriQuint Semiconductor, Inc. (TQNT) will combine in an all-stock transaction that will be a merger of equals, the two radio frequency chipmakers said Monday. The transaction will create a new company with combined revenue of more than $2 billion.

Under the deal, TriQuint shareholders will receive 1.675 shares of the combined company, while RFMD shareholders will receive 1 share of the combined company for each TriQuint or RFMD share held by them. At the closing of the transaction, the companies will execute a one-for-four reverse stock split that will result in about 145 million shares outstanding.

The transaction is expected to close in the second half of calendar 2014, subject to approval by the shareholders of both companies as well as the receipt of regulatory approvals. The boards of directors of both RFMD and TriQuint have unanimously approved the transaction.

Former shareholders of RFMD and TriQuint will each own about 50 percent of the new company following the merger. The transaction represents an implied price of $9.73 for each TriQuint share, representing a 5.4 percent premium based on TriQuint's closing stock price of $9.23 on February 21, 2014.

As of Friday, RF Micro Devices had a market capitalization of $1.64 billion, while TriQuint had a market capitalization of $1.48 billion.

Greensboro, North Carolina-based RF Micro Devices and Hillsboro, Oregon-based TriQuint noted that the merger will create new growth opportunities for the combined company in three large global markets - mobile devices, network infrastructure and aerospace/defense - with scale advantages, new products and a greatly improved operating model.

Bob Bruggeworth, President and CEO of RFMD said, "The combination of TriQuint and RFMD creates a new leader in RF solutions with expertise in mobile devices and complex infrastructure and global defense applications. With this merger of equals, we will bring under one roof all of the critical RF building blocks necessary to innovate at the heart of what makes mobile mobile - the crucial back-and-forth data flow between the mobile device and the network."

The two companies expect the combination to achieve at least $150 million in cost synergies, comprising $75 million in annualized synergies at the end of first year following closing of the deal, and an additional $75 million exiting the second year. The transaction is expected to be accretive to adjusted earnings per share in the first full fiscal year following the closing of the transaction.

The new company or NewCo will have a new name and shared leadership team. TriQuint CEO Ralph Quinsey will serve as non-executive chairman of the new company, while RFMD CEO Bob Bruggeworth will serve as chief executive officer. The boards of directors of both RFMD and TriQuint have unanimously approved the transaction.

TriQuint CFO Steve Buhaly will serve as chief financial officer and RFMD CFO Dean Priddy will serve as executive vice president of administration, reporting to the CEO and responsible for integration and synergy value creation.

RFMD's Eric Creviston has been appointed as President of mobile products, while TriQuint's James Klein will be President of infrastructure and defense products, TriQuint's Steven Grant will serve as Corporate Vice President for Fab Technology & Manufacturing and RFMD's Jim Stilson will be Corporate Vice President for Assembly/Test Technology & Manufacturing. The new company will name other leaders later this year.

The board of directors of the new company will be made up of ten directors, with five directors each from the existing boards of RFMD and TriQuint. Eight of the ten directors will be independent.

RFMD closed Friday's trading at $5.81, down $0.15 or 2.52 percent on a volume of 5.46 million shares. TQNT closed Friday's trading at $9.23, down $0.08 or 0.86 percent on a volume of 1.54 million shares.

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