424B3
Table of Contents

Filed pursuant to Rule 424(b)(3)

Registration No. 333-202679

 

LOGO   LOGO

TO THE STOCKHOLDERS OF MAXLINEAR, INC. AND ENTROPIC COMMUNICATIONS, INC. — MERGER PROPOSAL

YOUR VOTE IS VERY IMPORTANT

March 30, 2015

Dear Stockholders,

The boards of each of MaxLinear, Inc. (“MaxLinear”) and Entropic Communications, Inc. (“Entropic”) have unanimously adopted and approved an Agreement and Plan of Merger and Reorganization (referred to as the merger agreement) pursuant to which, subject to stockholder approvals and certain other closing conditions, a wholly-owned subsidiary of MaxLinear will merge with and into Entropic, with Entropic continuing as the interim surviving entity (referred to herein as the merger). Promptly thereafter, Entropic will merge with and into a second wholly-owned subsidiary of MaxLinear, with such subsidiary continuing as the final surviving entity (referred to herein as the subsequent merger). If the merger is completed, Entropic stockholders will be entitled to receive, at the effective time of the merger, (i) $1.20 in cash, without interest, (ii) 0.2200 of a share of MaxLinear Class A common stock, for each share of Entropic common stock they own immediately prior to the effective time of the merger, and (iii) cash payable in lieu of any fractional shares (referred to collectively as the merger consideration).

MaxLinear Class A common stock is listed on the New York Stock Exchange and trades under the symbol “MXL.” As of March 27, 2015, the last trading day before the date of this joint proxy statement/prospectus, the last reported sales price of MaxLinear Class A common stock at the end of regular trading hours, as reported on the New York Stock Exchange, was $7.97. Entropic common stock is listed on the Nasdaq Capital Market and trades under the symbol “ENTR.” As of March 27, 2015, the last trading day before the date of this joint proxy statement/prospectus, the last reported sales price of Entropic common stock at the end of regular trading hours, as reported on the Nasdaq Capital Market, was $2.95.

In connection with the merger, MaxLinear stockholders are invited to attend a special meeting of MaxLinear stockholders to be held on April 30, 2015, at 8:30 a.m., local time, at 5966 La Place Court, Suite 100, Carlsbad, California 92008, and Entropic stockholders are invited to attend a special meeting of Entropic stockholders to be held on April 30, 2015, at 10:00 a.m., local time, at 6350 Sequence Drive, San Diego, California 92121.

At the MaxLinear special meeting, MaxLinear stockholders will be asked (i) to vote on a proposal to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement (referred to as the share issuance proposal) and (ii) to vote on a proposal to adjourn the MaxLinear special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the share issuance proposal (referred to as the MaxLinear adjournment proposal). The MaxLinear board unanimously determined that the merger agreement, the merger, and the other transactions contemplated by the merger agreement are advisable and in the best interests of MaxLinear’s stockholders, and unanimously approved and adopted the merger agreement. The MaxLinear board unanimously recommends that MaxLinear stockholders vote “FOR” the share issuance proposal and “FOR” the MaxLinear adjournment proposal.

At the Entropic special meeting, the Entropic stockholders will be asked (i) to vote on a proposal to adopt the merger agreement (referred to as the merger proposal), (ii) to vote on a proposal to approve on an advisory (non-binding) basis the compensation that may be paid or become payable to Entropic’s named executive officers that is based on or otherwise relates to the merger agreement and the transactions contemplated by the merger agreement (referred to as the compensation proposal), and (iii) to vote on a proposal to adjourn the Entropic special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the merger proposal (referred to as the Entropic adjournment proposal). The Entropic board unanimously determined that the merger agreement, the merger, and the other transactions contemplated by the merger agreement are advisable and fair to and in the best interests of Entropic and Entropic’s stockholders, and unanimously approved and adopted the merger agreement. The Entropic board unanimously recommends that Entropic stockholders vote “FOR” the merger proposal, “FOR” the compensation proposal, and “FOR” the Entropic adjournment proposal.

MaxLinear estimates that it may issue up to approximately 20.6 million shares of its Class A common stock to current holders of Entropic’s common stock in the merger pursuant to the terms of the merger agreement. Immediately following completion of the merger, existing holders of MaxLinear capital stock are expected to hold approximately 65% and current Entropic stockholders are expected to hold approximately 35% of MaxLinear’s outstanding capital stock.

We encourage you to read carefully this joint proxy statement/prospectus before voting, including the section entitled Risk Factors beginning on page 34 of this joint proxy statement/prospectus. The market price of MaxLinear Class A common stock will continue to fluctuate following the date of the special meetings. Consequently, at the time of the special meetings, the value of the stock portion of the merger consideration will not yet be determined.

Your vote is very important. MaxLinear and Entropic cannot complete the merger unless MaxLinear stockholders approve the share issuance proposal and Entropic stockholders approve the merger proposal. Whether or not you plan to attend the MaxLinear special meeting or the Entropic special meeting, please vote promptly by mailing a completed proxy card in the enclosed return envelope (which is postage prepaid if mailed in the United States) or complete your proxy by following the instructions supplied on the proxy card for voting by telephone or on the Internet (or, if your shares are held in “street name” through a broker, bank, or other nominee holder, by following the voting instructions provided by such broker, bank, or other nominee holder).

 

Sincerely,

 

LOGO

 

Kishore Seendripu, Ph.D.

President and Chief Executive Officer

MaxLinear, Inc.

  

LOGO

 

Theodore Tewksbury, Ph.D.

President and Chief Executive Officer

Entropic Communications, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated March 30, 2015, and is first being mailed to stockholders of MaxLinear and Entropic on or about April 1, 2015.


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LOGO

MaxLinear, Inc.

5966 La Place Court, Suite 100

Carlsbad, California 92008

(760) 692-0711

NOTICE OF SPECIAL MEETING OF MAXLINEAR STOCKHOLDERS

To the Stockholders of MaxLinear, Inc.:

MaxLinear, Inc. will hold its special meeting of stockholders on Thursday, April 30, 2015 at MaxLinear’s principal executive offices located at 5966 La Place Court, Suite 100, Carlsbad, California 92008, at 8:30 a.m., local time. MaxLinear is holding the meeting to consider proposals:

 

  1. to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the Agreement and Plan of Merger and Reorganization, dated as of February 3, 2015 (referred to as the merger agreement), by and among MaxLinear, Entropic Communications, Inc., Excalibur Acquisition Corporation, and Excalibur Subsidiary, LLC (referred to as the share issuance proposal); and

 

  2. to adjourn the MaxLinear special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the merger proposal (referred to as the MaxLinear adjournment proposal).

Any action on the items of business described above may be considered at the special meeting at the time and on the date specified above or at any time and date to which the special meeting may be properly adjourned or postponed.

The MaxLinear board has unanimously (i) determined that the merger agreement, the merger, and the other transactions contemplated thereby are advisable and in the best interests of MaxLinear’s stockholders, (ii) approved and adopted the merger agreement, and (iii) resolved to recommend approval of the share issuance proposal and the MaxLinear adjournment proposal by the stockholders of MaxLinear.

The MaxLinear board unanimously recommends that you vote “FOR” the share issuance proposal and “FOR” the MaxLinear adjournment proposal.

You are entitled to vote only if you were a MaxLinear stockholder of record as of the close of business on the record date, March 30, 2015. A list of stockholders eligible to vote at the MaxLinear special meeting will be available for inspection at the special meeting and at the offices of MaxLinear in Carlsbad, California, during regular business hours for a period of no less than 10 days prior to the special meeting.

Your vote is important. MaxLinear cannot complete the merger unless MaxLinear’s stockholders approve the share issuance proposal. Whether or not you plan to attend the special meeting, please vote promptly by mailing a completed proxy card in the enclosed return envelope (which is postage prepaid if mailed in the United States) or complete your proxy by following the instructions supplied on the proxy card for voting by telephone or on the Internet (or, if your shares are held in “street name” through a broker, bank, or other nominee holder, by following the voting instructions provided by such broker, bank, or other nominee holder).

By Order of the Board of Directors,

 

LOGO

Kishore Seendripu, Ph.D.

President and Chief Executive Officer

March 30, 2015

Carlsbad, California


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LOGO

Entropic Communications, Inc.

6350 Sequence Drive

San Diego, California 92121

(858) 768-3600

NOTICE OF SPECIAL MEETING OF ENTROPIC STOCKHOLDERS

To the Stockholders of Entropic Communications, Inc.:

Entropic Communications, Inc. will hold its special meeting of stockholders on Thursday, April 30, 2015 at Entropic’s principal executive offices located at 6350 Sequence Drive, San Diego, California 92121, at 10:00 a.m., local time. Entropic is holding the meeting to consider proposals:

 

  1. to adopt the Agreement and Plan of Merger and Reorganization, dated as of February 3, 2015 (referred to as the merger agreement), by and among Entropic, MaxLinear, Inc., Excalibur Acquisition Corporation, and Excalibur Subsidiary, LLC (referred to as the merger proposal);

 

  2. to approve on an advisory (non-binding) basis the compensation that may be paid or become payable to Entropic’s named executive officers that is based on or otherwise relates to the merger agreement and the transactions contemplated by the merger agreement (referred to as the compensation proposal); and

 

  3. to adjourn the Entropic special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the merger proposal (referred to as the Entropic adjournment proposal).

Any action on the items of business described above may be considered at the special meeting at the time and on the date specified above or at any time and date to which the special meeting may be properly adjourned or postponed.

The Entropic board has unanimously (i) determined that the merger agreement, the merger, and the other transactions contemplated thereby are advisable and fair to and in the best interests of Entropic and Entropic’s stockholders, (ii) approved and adopted the merger agreement, the merger, and the other transactions contemplated thereby, and (iii) resolved to recommend adoption of the merger agreement by the stockholders of Entropic.

The Entropic board unanimously recommends that the Entropic stockholders vote “FOR” the merger proposal, “FOR” the compensation proposal, and “FOR” the Entropic adjournment proposal.

You are entitled to vote only if you were an Entropic stockholder of record as of the close of business on the record date, March 18, 2015. A list of stockholders eligible to vote at the Entropic special meeting will be available for inspection at the special meeting and at the offices of Entropic in San Diego, California, during regular business hours for a period of no less than 10 days prior to the special meeting.

Your vote is important. Entropic cannot complete the merger unless Entropic’s stockholders approve the merger proposal. Whether or not you plan to attend the special meeting, please vote promptly by mailing a completed proxy card in the enclosed return envelope (which is postage prepaid if mailed in the United States) or complete your proxy by following the instructions supplied on the proxy card for voting by telephone or on the Internet (or, if your shares are held in “street name” through a broker, bank, or other nominee holder, by following the voting instructions provided by such broker, bank, or other nominee holder).

By Order of the Board of Directors,

 

LOGO

Theodore Tewksbury, Ph.D.

President and Chief Executive Officer

March 30, 2015

San Diego, California


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ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about MaxLinear and Entropic from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain copies of the documents incorporated by reference into this joint proxy statement/prospectus through the Securities and Exchange Commission (SEC) website at www.sec.gov or by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

MaxLinear, Inc.

Attn: Investor Relations

5966 La Place Court, Suite 100

Carlsbad, California 92008

Email: ir@maxlinear.com

Telephone: (760) 517-1112

Entropic Communications, Inc.

Attn: Investor Relations

6350 Sequence Drive

San Diego, CA 92121

Email: ir@entropic.com

Telephone: (858) 768-3852

In addition, you may also obtain additional copies of this joint proxy statement/prospectus or the documents incorporated by reference into this joint proxy statement/prospectus by contacting Georgeson Inc., MaxLinear’s proxy solicitor, or MacKenzie Partners, Inc., Entropic’s proxy solicitor, at the addresses and telephone numbers listed below. You will not be charged for any of these documents that you request.

 

Georgeson Inc.

480 Washington Blvd., 26th Floor

Jersey City, NJ 07310

Toll-free: (888) 877-5360

MacKenzie Partners, Inc.

105 Madison Avenue

New York, NY 10016

Toll-free: (800) 322-2885

Collect: (212) 929-5500

E-mail: proxy@mackenziepartners.com

To obtain timely delivery of documents, you must request them no later than five business days before the date of your meeting. Therefore, if you would like to request documents from MaxLinear, please do so by April 23, 2015, in order to receive them before the MaxLinear special meeting. If you would like to request documents from Entropic, please do so by April 23, 2015, in order to receive them before the Entropic special meeting.

For a more detailed description of the information incorporated by reference in this joint proxy statement/prospectus and how you may obtain it, see “Where You Can Find More Information” beginning on page 192 of this joint proxy statement/prospectus.


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETINGS

     1   

General Questions and Answers

     1   

Questions and Answers for MaxLinear Stockholders

     6   

Questions and Answers for Entropic Stockholders

     9   

SUMMARY

     14   

Information about the Companies

     14   

MaxLinear, Inc.

     14   

Entropic Communications, Inc.

     14   

Excalibur Acquisition Corporation and Excalibur Subsidiary, LLC

     15   

Market Price of MaxLinear Class A Common Stock and Entropic Common Stock

     15   

The Special Meeting of MaxLinear Stockholders

     15   

Proposal 1: The Share Issuance Proposal

     15   

Proposal 2: The MaxLinear Adjournment Proposal

     15   

Required Vote

     15   

Stock Ownership of MaxLinear Directors and Executive Officers

     16   

The Special Meeting of Entropic Stockholders

     16   

Proposal 1: The Merger Proposal

     16   

Proposal 2: The Compensation Proposal

     16   

Proposal 3: The Entropic Adjournment Proposal

     16   

Required Vote

     16   

Stock Ownership of Entropic Directors and Executive Officers

     16   

The Merger

     17   

What Entropic Stockholders Will Receive in the Merger

     17   

Ownership of MaxLinear Following Completion of the Merger

     17   

Treatment of Entropic Equity Awards and Employee Stock Purchase Plan

     17   

Recommendation of the MaxLinear Board

     19   

Opinion of MaxLinear’s Financial Advisor

     19   

Recommendation of the Entropic Board

     19   

Opinion of Entropic’s Financial Advisor

     20   

Interests of the Directors and Executive Officers of Entropic in the Merger

     20   

The Merger Agreement

     21   

No Solicitation

     21   

MaxLinear Board of Directors

     21   

Conditions to Completion of the Merger

     21   

Termination; Fees and Expenses

     22   

Voting Agreements

     22   

Accounting Treatment of the Transaction

     23   

Material U.S. Federal Income Tax Consequences of the Transaction

     23   

Regulatory Filings and Approvals Required to Complete the Merger

     24   

MaxLinear Stockholders Will Not Have Appraisal Rights in Connection with the Merger

     24   

Entropic Stockholders Will Have Appraisal Rights in Connection with the Merger

     24   

Rights of Entropic Stockholders Will Change as a Result of the Merger

     24   

Risk Factors

     25   

Delisting and Deregistration of Entropic Common Stock After the Merger

     25   

Registration of Shares of MaxLinear Class A Common Stock Received in the Merger

     25   

Additional Information — Certain Litigation Relating to the Merger

     25   

The Delaware Actions

     25   

The California State Court Actions

     26   

The California Federal Court Actions

     26   

SELECTED HISTORICAL FINANCIAL DATA OF MAXLINEAR

     27   

 

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SELECTED HISTORICAL FINANCIAL DATA OF ENTROPIC

  29   

SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION OF MAXLINEAR AND ENTROPIC

  31   

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA COMBINED PER SHARE DATA

  32   

COMPARATIVE PER SHARE MARKET PRICE DATA

  33   

RISK FACTORS

  34   

Risks Relating to the Acquisition of Entropic and the Operations of MaxLinear Following Completion of the Acquisition

  34   

Risks Related to Ownership of MaxLinear Class A Common Stock

  43   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

  47   

INFORMATION ABOUT THE COMPANIES

  48   

THE MAXLINEAR SPECIAL MEETING

  50   

Date, Time and Place of MaxLinear Special Meeting

  50   

Purpose of MaxLinear Special Meeting

  50   

Record Date; Outstanding Shares; Voting Rights

  50   

Voting Rights for Holders of Class A Common Stock and Class B Common Stock

  51   

Quorum

  51   

Required Vote

  51   

Adjournments

  52   

Stock Ownership of Directors and Executive Officers of MaxLinear

  52   

Voting Procedures

  52   

Revoking Proxies or Voting Instructions

  53   

Tabulation of Votes

  54   

How You Can Reduce the Number of Copies of MaxLinear’s Proxy Materials You Receive

  54   

Solicitation of Proxies

  54   

PROPOSAL 1: ISSUANCE OF SHARES OF CLASS A COMMON STOCK IN THE MERGER PURSUANT TO THE TERMS OF THE MERGER AGREEMENT

  55   

Required Vote

  55   

Recommendation of the Board of Directors of MaxLinear

  55   

PROPOSAL 2: ADJOURNMENT TO SOLICIT ADDITIONAL PROXIES IF NECESSARY OR ADVISABLE

  56   

Required Vote

  56   

Recommendation of the Board of Directors of MaxLinear

  56   

THE ENTROPIC SPECIAL MEETING

  57   

Date, Time and Place of Entropic Special Meeting

  57   

Purpose of Entropic Special Meeting

  57   

Record Date; Outstanding Shares; Voting Rights

  57   

Quorum

  58   

Required Vote

  58   

Adjournments

  59   

Stock Ownership of Directors and Executive Officers of Entropic

  59   

Voting Procedures

  59   

Revoking Proxies or Voting Instructions

  60   

Tabulation of Votes

  60   

How You Can Reduce the Number of Copies of Entropic’s Proxy Materials You Receive

  60   

Solicitation of Proxies

  61   

PROPOSAL 1: THE MERGER AGREEMENT

  62   

Required Vote

  62   

Recommendation of the Board of Directors of Entropic

  62   

PROPOSAL 2: ADVISORY VOTE TO APPROVE MERGER-RELATED COMPENSATION FOR ENTROPIC’S NAMED EXECUTIVE OFFICERS

  63   

 

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Required Vote

  63   

Recommendation of the Board of Directors of Entropic

  63   

PROPOSAL 3. POSSIBLE ADJOURNMENT TO SOLICIT ADDITIONAL PROXIES IF NECESSARY OR ADVISABLE

  64   

Required Vote

  64   

Recommendation of the Board of Directors of Entropic

  64   

THE MERGER

  65   

General

  65   

Background of the Merger

  66   

MaxLinear Board of Directors’ Recommendation and Reasons for the Merger

  80   

Opinion of MaxLinear’s Financial Advisor

  82   

Certain Unaudited Prospective Financial Information Reviewed by MaxLinear’s Board of Directors and MaxLinear’s Financial Advisor

  92   

Entropic Board of Directors’ Recommendation and Reasons for the Merger

  97   

Opinion of Entropic’s Financial Advisor

  100   

Certain Unaudited Prospective Financial Information Reviewed by Entropic’s Board of Directors and Entropic’s Financial Advisor

  114   

Interests of the Directors and Executive Officers of MaxLinear in the Merger

  117   

MaxLinear Executive Compensation Payable in Connection with the Merger

  117   

Interests of the Directors and Executive Officers of Entropic in the Merger

  118   

Accounting Treatment of the Transaction

  118   

Material U.S. Federal Income Tax Consequences of the Transaction

  118   

Regulatory Filings and Approvals Required to Complete the Merger

  121   

Appraisal Rights

  122   

Litigation Relating to the Merger

  122   

Delisting and Deregistration of Entropic Common Stock After the Merger

  123   

Registration of Shares of MaxLinear Class A Common Stock Received in the Merger

  123   

INTERESTS OF THE DIRECTORS AND EXECUTIVE OFFICERS OF ENTROPIC IN THE MERGER

  124   

Potential Payments upon Termination or Change in Control

  124   

Golden Parachute Table

  129   

Treatment of Entropic Equity Awards

  131   

Indemnification of Directors and Officers; Directors’ and Officers’ Insurance

  133   

Board of MaxLinear Following Completion of the Merger

  134   

THE MERGER AGREEMENT

  135   

The Merger

  135   

Closing and Effective Time of the Merger

  136   

Treatment of Securities

  136   

Entropic Common Stock

  136   

Fractional Shares

  136   

Appraisal Rights

  137   

Treatment of Entropic Equity Awards

  137   

Exchange Fund; Exchange of Stock Certificates

  138   

Distributions with Respect to Unexchanged Shares

  139   

Termination of Exchange Fund; No Liability

  139   

Lost, Stolen or Destroyed Certificates

  139   

Representations and Warranties

  139   

Conduct of Business Before Completion of the Merger

  141   

MaxLinear and Entropic are Required to Terminate Any Existing Discussions with Third Parties and are Prohibited from Soliciting Other Offers

  143   

Obligations of each of the Entropic and MaxLinear Boards with Respect to its Recommendation

  146   

Efforts to Complete and Regulatory Matters

  148   

 

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Registration Statement and Joint Proxy Statement/Prospectus

  148   

Stockholder Meetings

  149   

Public Announcements

  149   

Entropic Employee Benefits; 401(k) Plans

  149   

Indemnification and Insurance

  150   

Listing of MaxLinear Class A Common Stock

  150   

Takeover Statutes

  150   

MaxLinear and Entropic Insiders

  150   

Tax Matters

  151   

MaxLinear Board of Directors

  151   

Conditions to Obligations to Complete the Merger

  151   

Material Adverse Effect

  153   

Termination; Fees and Expenses

  154   

Termination

  154   

Termination Fees and Expenses

  156   

Expenses Generally

  158   

Voting Agreements

  158   

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

  160   

NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

  163   

DESCRIPTION OF MAXLINEAR CAPITAL STOCK

  171   

General

  171   

Class A and Class B Common Stock

  172   

Dividend Rights

  172   

Voting Rights

  172   

Liquidation Rights

  173   

Merger Transactions

  173   

Subdivisions and Combinations

  173   

Conversion

  173   

Preferred Stock

  174   

Options

  174   

Restricted Stock Units

  174   

Anti-Takeover Effects of Delaware Law and MaxLinear’s Certificate of Incorporation and Bylaws

  175   

Certificate of Incorporation and Bylaws

  175   

Delaware Anti-Takeover Statute

  176   

Transfer Agent and Registrar

  176   

New York Stock Exchange Listing

  176   

COMPARISON OF RIGHTS OF STOCKHOLDERS OF MAXLINEAR AND ENTROPIC

  177   

Material Differences in Stockholder Rights

  177   

APPRAISAL RIGHTS OF ENTROPIC STOCKHOLDERS

  187   

Written Demand and Notice

  188   

Judicial Appraisal

  188   

Request for Appraisal Data

  189   

Withdrawal

  190   

Tax Considerations

  190   

FUTURE STOCKHOLDER PROPOSALS

  191   

MaxLinear

  191   

Stockholder Proposals for 2015 Annual Meeting

  191   

Entropic

  191   

LEGAL MATTERS

  192   

EXPERTS

  192   

WHERE YOU CAN FIND MORE INFORMATION

  192   

ANNEX A: MERGER AGREEMENT

  A-1   

 

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ANNEX B: STIFEL OPINION

  B-1   

ANNEX C: BARCLAY’S OPINION

  C-1   

ANNEX D: SECTION 262 OF THE DGCL

  D-1   

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETINGS

General Questions and Answers

The following questions and answers briefly address some commonly asked questions about the MaxLinear, Inc., a Delaware corporation (referred to as MaxLinear) special meeting, the Entropic Communications, Inc., a Delaware corporation (referred to as Entropic) special meeting, and the merger. These questions and answers may not include all the information that is important to stockholders of MaxLinear and Entropic. MaxLinear and Entropic urge stockholders to read carefully this entire joint proxy statement/prospectus, including the annexes and the other documents referred to herein.

 

Q: Why am I receiving this joint proxy statement/prospectus?

 

A: MaxLinear and Entropic have agreed to the acquisition of Entropic by MaxLinear in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of February 3, 2015, by and among MaxLinear, Entropic, Excalibur Acquisition Corporation, and Excalibur Subsidiary, LLC (referred to as the merger agreement). A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

Under the terms of the merger agreement, Excalibur Acquisition Corporation, a wholly-owned subsidiary of MaxLinear, will merge with and into Entropic, with Entropic continuing as the interim surviving entity (referred to as the merger). Promptly thereafter, Entropic will merge with and into a second wholly-owned subsidiary of MaxLinear, with such subsidiary continuing as the final surviving entity (referred to as the subsequent merger).

MaxLinear and Entropic are delivering this document to you as both a joint proxy statement of MaxLinear and Entropic and a prospectus of MaxLinear. It is a joint proxy statement because the boards of directors of each company are soliciting proxies from their respective stockholders. It is a prospectus because MaxLinear will issue shares of its Class A common stock in connection with the merger.

In order to complete the merger, MaxLinear stockholders must approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement and Entropic stockholders must adopt the merger agreement. MaxLinear will hold a special meeting of its stockholders and Entropic will hold a special meeting of its stockholders to obtain these approvals. Each of MaxLinear and Entropic is also asking its stockholders to approve other matters in connection with its special meeting that are described in this joint proxy statement/prospectus. This joint proxy statement/prospectus contains important information about the merger and the stockholder meetings of each of MaxLinear and Entropic, and you should read it carefully. For MaxLinear stockholders, the enclosed voting materials for the MaxLinear special meeting allow MaxLinear stockholders to vote shares of MaxLinear Class A common stock and Class B common stock without attending the MaxLinear special meeting. For Entropic stockholders, the enclosed voting materials for the Entropic special meeting allow Entropic stockholders to vote shares of Entropic common stock without attending the Entropic special meeting.

Stockholder votes are important. MaxLinear and Entropic encourage stockholders of each company to vote as soon as possible. For more specific information on how to vote, please see the questions and answers for each of the MaxLinear and Entropic stockholders below.

 

Q: Who is soliciting my proxy?

 

A: Proxies in the form enclosed with this joint proxy statement/prospectus are being solicited from the MaxLinear stockholders by the board of directors of MaxLinear. Proxies in the form enclosed with this joint proxy statement/prospectus are being solicited from the Entropic stockholders by the board of directors of Entropic.

 

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Q: When do MaxLinear and Entropic expect to complete the merger?

 

A: MaxLinear and Entropic currently expect to complete the merger in the second quarter of 2015. However, neither MaxLinear nor Entropic can predict the exact timing of the completion of the merger because the merger is subject to certain closing conditions. For a discussion of the timing of the merger, see “The Merger Agreement—Closing and Effective Time of the Merger” beginning on page 136. For a more complete description of the closing conditions to the merger, see “The Merger Agreement—Conditions to Obligations to Complete the Merger” beginning on page 151.

 

Q: What effects will the merger have on MaxLinear and Entropic?

 

A: Upon completion of the merger, Entropic will cease to be a publicly traded company and MaxLinear will be the only stockholder of Entropic. As a result, following completion of the merger, Entropic stockholders will own shares in MaxLinear only and will not directly own any shares in Entropic, and MaxLinear stockholders will continue to own their MaxLinear shares. Following completion of the merger, the registration of Entropic’s common stock and its reporting obligations with respect to its common stock under the Securities Exchange Act of 1934, as amended, or Exchange Act, will be terminated. In addition, upon completion of the merger, shares of Entropic common stock will no longer be quoted on the Nasdaq Capital Market or any other stock exchange or quotation system.

 

Q: What will Entropic stockholders receive in the merger?

 

A: If the proposed merger is completed, at the effective time of the merger, Entropic stockholders will be entitled to receive (i) $1.20 in cash, without interest, and (ii) 0.2200 of a share of MaxLinear Class A common stock for each share of Entropic common stock that they own (collectively referred to as the merger consideration). MaxLinear will not issue any fractional shares of Class A common stock in connection with the merger. Instead, each Entropic stockholder who would otherwise be entitled to receive a fraction of a share of MaxLinear Class A common stock will be entitled to receive (after aggregating all fractional shares of MaxLinear Class A common stock that otherwise would be received by such Entropic stockholder) an amount of cash (rounded down to the nearest whole cent), without interest, equal to the amount obtained by multiplying such fraction of a share by the closing price for one share of MaxLinear Class A common stock as quoted on the New York Stock Exchange (NYSE) on the trading day ending on the business day immediately prior to the completion of the merger.

 

Q: What are the differences between the voting rights of Class A common stock and Class B common stock?

 

A: Holders of MaxLinear’s Class A common stock and Class B common stock have identical voting rights, except that holders of MaxLinear’s Class A common stock are entitled to one vote per share and holders of MaxLinear’s Class B common stock are entitled to ten votes per share with respect to transactions that would result in a change of control of MaxLinear (including any transaction that would constitute a “superior proposal” under the terms of the merger agreement) or, in certain cases that relate to MaxLinear’s equity incentive plans. In addition, holders of MaxLinear’s Class B common stock are entitled, voting separately as a class, to elect two members of MaxLinear’s board of directors. The directors elected by holders of MaxLinear’s Class B common stock are Curtis Ling, Ph.D., whose current term will expire at MaxLinear’s annual meeting in 2017, and Kishore Seendripu, Ph.D., whose current term will expire at MaxLinear’s annual meeting in 2015.

As of December 31, 2014, MaxLinear’s founders, including its Chairman, President, and Chief Executive Officer, Dr. Seendripu, together control approximately 17% of MaxLinear’s outstanding capital stock, representing approximately 61% of the voting power of MaxLinear’s outstanding capital stock with respect to change of control matters and the adoption of or amendment to MaxLinear’s equity incentive plans. Dr. Seendripu and the other founders therefore have significant influence over MaxLinear management and

 

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affairs and over all matters requiring stockholder approval, including the election of two Class B directors and significant corporate transactions, such as a merger or other sale of MaxLinear or its assets, for the foreseeable future.

 

Q: Is the stock exchange ratio subject to adjustment based on changes in the prices of MaxLinear Class A common stock and/or Entropic common stock?

 

A: No. The number of shares of MaxLinear Class A common stock issuable in respect of each share of Entropic common stock in the merger (i.e., 0.2200 of a share of MaxLinear Class A common stock for each share of Entropic common stock, referred to herein as the stock exchange ratio) is fixed, and no adjustments to the stock exchange ratio will be made based on changes in the price of either the MaxLinear Class A common stock or Entropic common stock prior to the closing of the merger. As a result of any such changes in stock price, the aggregate market value of the shares of MaxLinear Class A common stock that the Entropic stockholders are entitled to receive at the time that the merger is closed could vary significantly from the value of such shares on the date of this joint proxy statement/prospectus, the date of the MaxLinear special meeting, the date of the Entropic special meeting or the date on which the merger is completed and the Entropic stockholders become entitled to receive their shares of MaxLinear Class A common stock.

 

Q: How does the stock exchange ratio affect the ownership of MaxLinear after completion of the merger?

 

A: Because the stock exchange ratio is fixed, to the extent that the number of shares of outstanding MaxLinear Class A common stock or Entropic common stock changes prior to completion of the merger, whether due to any new issuance of shares of MaxLinear Class A common stock or Entropic common stock, any exercise of any outstanding options or other rights to purchase shares of MaxLinear Class A common stock or Entropic common stock or otherwise, there will automatically occur a corresponding change in the relative ownership percentages of the current MaxLinear shareholders and the current Entropic stockholders of the combined company.

 

Q: What if I have Entropic stock options?

 

A:

At the effective time of the merger, each then outstanding option to purchase shares of Entropic common stock, whether or not exercisable or vested that is held by any employee, director or consultant of Entropic (or its subsidiaries) whose continuous service has not terminated as of immediately prior to the completion of the merger and who remains or becomes an employee, director or consultant of MaxLinear or Entropic or their respective subsidiaries immediately after the completion of the merger (referred to as a continuing service provider), will be assumed by MaxLinear and converted into an option to acquire MaxLinear Class A common stock, on the same terms and conditions as were applicable to such Entropic stock option immediately prior to the effective time of the merger, except that the number of shares for which such option is or may become exercisable will equal the number of shares of Entropic common stock subject to the option as of immediately prior to the effective time of the merger multiplied by the option exchange ratio (with the resulting number rounded down to the nearest whole share of MaxLinear Class A common stock) and the exercise price of the assumed option will equal the quotient obtained by dividing the per share exercise price of the assumed option immediately prior to the effective time of the merger, by the option exchange ratio (which resulting price per share will be rounded up to the nearest whole cent). Each assumed stock option that qualified as an incentive stock option will continue to qualify as an incentive stock option to the extent possible. The “option exchange ratio” will equal the sum of (i) 0.2200 of a share of MaxLinear Class A common stock plus (ii) the quotient obtained by dividing $1.20 by the volume weighted average price per share of MaxLinear Class A common stock over the ten most recent trading days ending on the second trading day prior to the effective time of the merger. Each option to purchase shares of Entropic common stock that is outstanding immediately prior to the effective time of the merger and is held by a non-continuing service provider (including non-continuing members of Entropic’s board of directors other than Theodore Tewksbury, Ph.D.) will not be assumed by MaxLinear and will be cancelled for no consideration and have no further effect following the effective time of the merger. Under the terms of

 

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  Entropic’s 2007 Equity Incentive Plan, stock options that are held by participants whose continuous service to Entropic has not terminated prior to the effective time of the merger and are not being assumed will fully vest. Each non-continuing service provider must exercise his or her stock options prior to the effective time of the merger in order to receive any merger consideration. In addition, stock options held by members of the board of directors of Entropic that were granted under Entropic’s 2007 Non-Employee Directors’ Stock Option Plan will fully vest in connection with the merger under the terms of the option agreements that such options were granted pursuant to. For additional information about the treatment of Entropic stock options in connection with the merger, please see “The Merger Agreement—Treatment of Entropic Equity Awards” beginning on page 137.

 

Q: What if I have Entropic restricted stock units?

 

A: At the effective time of the merger, each then outstanding Entropic restricted stock unit award and performance stock unit award that is held by a continuing service provider and that is solely subject to time-based vesting, or with respect to performance stock unit awards, that convert into awards as of the effective time of the merger that are solely subject to time-based vesting following the closing, whether or not then vested or issuable, will be assumed by MaxLinear and converted into an award to receive shares of MaxLinear Class A common stock on the same terms and conditions that were applicable to such Entropic restricted stock unit award or performance stock unit award prior to the effective time of the merger, except that the number of shares subject to the award will be adjusted such that the number of shares of Entropic common stock subject to the assumed award immediately prior to the effective time will be multiplied by the option exchange ratio (with the resulting number rounded down to the nearest whole share of MaxLinear Class A common stock). Each restricted stock unit award and performance stock unit award that is outstanding immediately prior to the effective time of the merger and is held by a non-continuing service provider will not be assumed by MaxLinear and will be cancelled for no consideration and have no further effect following the effective time of the merger, provided that under the terms of Entropic’s 2007 Equity Incentive Plan, restricted stock units that are held by participants whose continuous service to Entropic has not terminated prior to the effective time of the merger and are not being assumed will fully vest. In addition, all or a portion of the restricted stock units held by certain named executive officers may or will vest upon the effective time of the merger as described in more detail in the section entitled “The Merger Agreement—Treatment of Entropic Equity Awards” beginning on page 137. The number of performance stock units that will be considered assumed units will be calculated in accordance with the terms of the merger agreement and all other performance stock units will be cancelled for no consideration and have no further effect following the effective time of the merger. For additional information about the treatment of Entropic restricted stock units in connection with the merger, please see “The Merger Agreement—Treatment of Entropic Equity Awards” beginning on page 137.

 

Q: What if I am a participant in Entropic’s Employee Stock Purchase Plan?

 

A: The current offering in progress under Entropic’s 2007 Employee Stock Purchase Plan as of the date of the merger agreement will be the final offering under Entropic’s 2007 Employee Stock Purchase Plan. If such offering has not ended prior to the effective time of the merger, then Entropic will take all actions necessary such that a date to be determined by Entropic in accordance with the terms of Entropic’s 2007 Employee Stock Purchase Plan (but prior to the effective time of the merger) will be the last day of such offering and the participant’s rights under such offering will terminate immediately after such purchase. Unless it has earlier terminated, Entropic will take all actions necessary so that the Entropic 2007 Employee Stock Purchase Plan will terminate immediately prior to and effective upon the effective time of the merger. All amounts withheld by Entropic on behalf of the participants in Entropic’s 2007 Employee Stock Purchase Plan that have not been used to purchase Entropic common stock at or prior to the effective time of the merger will be returned to the participants without interest pursuant to the terms of the plan.

 

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Q: What are the material United States federal income tax consequences of the transaction to Entropic stockholders?

 

A: MaxLinear and Entropic intend that the merger, together with the subsequent merger (collectively referred to as the integrated merger) will qualify as a “reorganization” for U.S. federal income tax purposes within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, or the Code, and it is a condition to the consummation of the merger that each of MaxLinear and Entropic receive an opinion from legal counsel to that effect. If the integrated merger so qualifies, an Entropic stockholder that is a U.S. person generally will recognize gain (but not loss) in an amount equal to the lesser of (i) the amount of cash received in the integrated merger (excluding any cash received in lieu of a fractional share of MaxLinear Class A common stock), and (ii) the excess, if any, of (a) the sum of the amount of such cash and the fair market value of the MaxLinear Class A common stock received in the integrated merger over (b) the stockholder’s tax basis in its shares of Entropic common stock. An Entropic stockholder that is a U.S. person receiving cash in the integrated merger in lieu of a fractional share of MaxLinear Class A common stock will be treated as if such fractional share were issued in the integrated merger and then redeemed by MaxLinear for cash, resulting in a recognition of gain or loss equal to the difference, if any, between the stockholder’s basis allocable to the fractional share and the amount of cash received. Any gain recognized generally will be long-term capital gain if, as of the date of the integrated merger, the shares of Entropic common stock exchanged in the transaction were held for more than one year.

Tax matters can be complicated, and the tax consequences of the integrated merger to a particular stockholder will depend in part on such stockholder’s circumstances. Thus, Entropic stockholders are urged to read the discussion in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Transaction” beginning on page 118 of this joint proxy statement/prospectus for a more complete discussion of the U.S. federal income tax consequences of the integrated merger and to consult their tax advisors as to the U.S. federal income tax consequences of the transaction, as well as the effects of state, local, non-U.S. and non-income tax laws.

 

Q: What happens if the merger is not completed?

 

A: If the merger is not completed for any reason, Entropic stockholders will not receive the merger consideration payable or issuable under the merger agreement. Instead, MaxLinear and Entropic will remain separate public companies, and Entropic expects that its common stock and MaxLinear expects that its Class A common stock will continue to be registered under the Exchange Act and traded on their applicable exchanges. In specified circumstances, either MaxLinear or Entropic may be required to pay to the other party a termination fee (or reimburse the other party’s transaction expenses, subject to a cap), as described in “The Merger Agreement—Termination; Fees and Expenses” beginning on page 154 of this joint proxy statement/prospectus.

 

Q: How do the MaxLinear and Entropic boards recommend that I vote?

 

A: The MaxLinear board unanimously recommends that MaxLinear stockholders vote “FOR” the proposal to issue shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement and “FOR” the proposal to adjourn the MaxLinear special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement.

The Entropic board unanimously recommends that Entropic stockholders vote “FOR” the proposal to adopt the merger agreement, “FOR” the proposal to approve on an advisory (non-binding) basis the compensation that may be paid or become payable to Entropic’s named executive officers that is based on or otherwise relates to the merger agreement and the other transactions contemplated by the merger agreement, and “FOR” the proposal to adjourn the Entropic special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to adopt the merger agreement.

 

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Q: Are the MaxLinear stockholders or Entropic stockholders entitled to appraisal rights?

 

A: MaxLinear stockholders are not entitled to appraisal rights for their shares under Delaware law in connection with the merger.

Entropic stockholders are entitled to appraisal rights under Section 262 of the Delaware General Corporation Law, or the DGCL, provided they fully comply with and follow the procedures and satisfy the conditions set forth in Section 262 of the DGCL. For more information regarding appraisal rights and how to perfect appraisal rights, see the section entitled “Appraisal Rights of Entropic Stockholders” beginning on page 187 of this joint proxy statement/prospectus. Failure to comply with Section 262 of the DGCL will result in your waiver of, or inability to exercise, appraisal rights.

 

Q: What should I do now?

 

A: Please review this joint proxy statement/prospectus carefully and vote as soon as possible. Most MaxLinear and Entropic stockholders may vote over the Internet or by telephone. Stockholders may also vote by signing, dating and returning each proxy card and voting instruction card received.

 

Q: What should I do if I receive more than one set of voting materials?

 

A: Please vote each proxy card and voting instruction card that you receive. You may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, stockholders who hold shares in more than one brokerage account will receive a separate voting instruction card for each brokerage account in which shares are held. If shares are held in more than one name, stockholders will receive more than one proxy or voting instruction card. In addition, if you are a stockholder of both MaxLinear and Entropic, you may receive one or more proxy cards or voting instruction cards for MaxLinear and one or more proxy cards or voting instruction cards for Entropic. If you are a stockholder of both MaxLinear and Entropic, please note that a vote for the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement for the MaxLinear special meeting will not constitute a vote for the proposal to adopt the merger agreement for the Entropic special meeting, and vice versa. Therefore, please vote each proxy and voting instruction card you receive, whether from MaxLinear or Entropic.

Questions and Answers for MaxLinear Stockholders

 

Q: When and where is the MaxLinear special meeting?

 

A: The special meeting of MaxLinear stockholders will be held at 8:30 a.m., local time, on April 30, 2015, at MaxLinear’s principal executive offices located at 5966 La Place Court, Suite 100, Carlsbad, California 92008.

 

Q: How can I attend the MaxLinear special meeting?

 

A: You are entitled to attend the MaxLinear special meeting only if you were a MaxLinear stockholder as of the record date or you hold a valid proxy for the MaxLinear special meeting. You must present an acceptable form of identification, such as a driver’s license, in order to gain admittance. If you are not a stockholder of record but hold shares as a beneficial owner in street name, you should provide proof of beneficial ownership as of the record date, such as an account statement, a copy of the voting instruction card provided by your broker, bank, or nominee, or other similar evidence of ownership. If you do not comply with the procedures outlined above, you may not be admitted to the special meeting.

Please let MaxLinear know if you plan to attend the meeting by marking the appropriate box on the enclosed proxy card or, if you vote by telephone or Internet, by indicating your plans when prompted.

 

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Q: What items of business will be voted on at the MaxLinear special meeting?

 

A: The items of business scheduled to be voted on at the special meeting are as follows:

 

    To approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement (referred to as the share issuance proposal); and

 

    To adjourn the MaxLinear special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the share issuance proposal (referred to as the MaxLinear adjournment proposal).

 

Q: How does the MaxLinear board of directors recommend that I vote?

 

A: The MaxLinear board of directors recommends that you vote your shares:

 

    “FOR” the share issuance proposal.

 

    “FOR” the MaxLinear adjournment proposal.

 

Q: What shares can I vote at the MaxLinear special meeting?

 

A: Each share of MaxLinear Class A common stock and Class B common stock issued and outstanding as of the close of business on March 30, 2015, the record date for the special meeting of stockholders, is entitled to vote on all items being considered at the special meeting. You may vote all shares owned by you as of the record date, including (i) shares held directly in your name as the stockholder of record and (ii) shares held for you as the beneficial owner in street name through a broker, bank, or other nominee. On the record date, MaxLinear had 38,282,563 shares of common stock issued and outstanding, consisting of 31,310,729 shares of Class A common stock and 6,971,834 shares of Class B common stock.

 

Q: How many votes am I entitled to per share?

 

A: For all proposals for which your vote is being solicited, each holder of shares of Class A common stock will be entitled to one vote for each share of Class A common stock held as of the record date, and each holder of shares of Class B common stock will be entitled to one vote for each share of Class B common stock held as of the record date. In addition, for all proposals for which your vote is being solicited, the Class A common stock and Class B common stock will vote together as a single class.

 

Q: Are there any differences between the voting rights of Class A common stock and Class B common stock in connection with the share issuance proposal and the MaxLinear adjournment proposal?

 

A: No, on the share issuance proposal and the MaxLinear adjournment proposal, the Class A common stock and Class B common stock will vote together as a single class with each share of Class A common stock and Class B common stock being entitled to one vote for each share held on the record date.

 

Q: How many shares must be present or represented to conduct business at the MaxLinear special meeting?

 

A: The quorum requirement for holding the MaxLinear special meeting and transacting business is that holders of a majority of the voting power of MaxLinear’s issued and outstanding Class A common stock and Class B common stock (voting together as a single class) be present in person or represented by proxy.

Abstentions and “broker non-votes” (if any) will be counted as present for purposes of determining the presence of a quorum for the MaxLinear special meeting.

Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed “non-routine.” Generally,

 

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if shares are held in street name, the beneficial owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. None of the proposals at the MaxLinear special meeting qualifies as “routine,” so brokers may not vote shares absent voting instructions from the beneficial owner.

 

Q: What is the voting requirement to approve each of the proposals?

 

A: The voting requirement for each proposal is as follows:

 

Proposal

  

Vote Required to Approve Proposal

To approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement.    The approval of the share issuance proposal requires the affirmative vote of a majority of the votes cast at the MaxLinear special meeting by holders of shares of MaxLinear Class A common stock and Class B common stock, voting together as a single class.
To adjourn the MaxLinear special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the share issuance proposal.    The approval of the MaxLinear adjournment proposal requires the affirmative vote of a majority of the votes cast at the MaxLinear special meeting by holders of shares of MaxLinear Class A common stock and Class B common stock, voting together as a single class.

Assuming a quorum is present, (i) abstentions will be treated as votes cast and, therefore, will have the same effect as a vote “AGAINST” each proposal and (ii) “broker non-votes” (if any) will have no effect on the outcome of the proposals.

 

Q: How can I contact MaxLinear’s transfer agent?

 

A: You may contact MaxLinear’s transfer agent by writing Computershare Trust Company, N.A., P.O. Box 30170, College Station, Texas 77842, by telephoning (800) 662-7232 or (781) 575-4238, or via its Investor Centre at www.computershare.com/investor.

 

Q: How can I vote my shares in person at the MaxLinear special meeting?

 

A: Shares held in your name as the stockholder of record may be voted by you in person at the special meeting. Shares held beneficially in street name may be voted by you in person at the special meeting only if you obtain a legal proxy from the broker, bank, or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the special meeting, MaxLinear recommends that you also submit your proxy or voting instructions as described below under the question “How can I vote my shares without attending the MaxLinear special meeting” so that your vote will be counted if you later decide not to attend the meeting.

 

Q: How can I vote my shares without attending the MaxLinear special meeting?

 

A: By mail

Complete, sign and date the enclosed proxy card or voting instruction card and return it in the return envelope provided (which is postage prepaid if mailed in the United States) before the MaxLinear special meeting to be held at 8:30 a.m., local time, on April 30, 2015 in Carlsbad, California. If you are a stockholder of record and you return your signed proxy card but do not indicate your voting preferences, the shares represented by your proxy card will be voted as recommended by MaxLinear’s board of directors.

 

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If you are a stockholder of record and the prepaid envelope is missing, please mail your completed proxy card to MaxLinear, Inc., c/o Computershare Trust Company, N.A., P.O. Box 30170, College Station, Texas 77842.

If you are a beneficial owner of shares, you should have received a proxy card and voting instructions with these proxy materials from your broker, bank or other nominee holder of record. Simply complete and mail the voting instruction card provided to the address provided by your broker, bank or other nominee holder of record.

You may still attend the special meeting in person even if you have already voted by proxy.

By telephone or on the Internet

If you are a stockholder of record, you may vote by following the telephone or Internet voting instructions on your proxy card.

Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day, 7 days a week, until 1:00 a.m., Central Time, on April 30, 2015.

If you are a beneficial owner of shares, your broker, bank or other holder of record may make telephone or Internet voting available to you. The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank or other nominee holder of record. Therefore, MaxLinear recommends that you follow the voting instructions in the materials you receive.

 

Q: Can I change my vote after I have submitted a proxy card or voting instruction card or revoke my proxy?

 

A: You may change your vote or revoke your proxy at any time prior to the taking of the vote at the special meeting. If you are the stockholder of record, you may change your vote or revoke your proxy by (i) granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method), (ii) providing a written notice of revocation to MaxLinear’s corporate secretary at MaxLinear, Inc., 5966 La Place Court, Suite 100, Carlsbad, California 92008 prior to your shares being voted, or (iii) attending the special meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank, or nominee following the instructions they provided or, if you have obtained a legal proxy from your broker, bank, or nominee giving you the right to vote your shares, by attending the special meeting and voting in person.

 

Q: Is there a list of stockholders entitled to vote at the MaxLinear special meeting?

 

A: The names of stockholders of record entitled to vote at the MaxLinear special meeting will be available at the MaxLinear special meeting and for ten days prior to the special meeting for any purpose germane to the special meeting, between the hours of 9:00 a.m. and 4:30 p.m., local time, at MaxLinear’s principal executive offices located at 5966 La Place Court, Suite 100, Carlsbad, California 92008, by contacting MaxLinear’s corporate secretary.

 

Q: Who can answer questions?

 

A: MaxLinear stockholders with questions about the merger or the proposals to be voted on at the MaxLinear special meeting or who desire additional copies of this joint proxy statement/prospectus or additional proxy cards may call Georgeson Inc., MaxLinear’s proxy solicitor for the special meeting, toll-free at (888)  877-5360.

Questions and Answers for Entropic Stockholders

 

Q: When and where is the Entropic special meeting?

 

A: The special meeting of Entropic stockholders will be held at 10:00 a.m., local time, on April 30, 2015, at Entropic’s principal executive offices located at 6350 Sequence Drive, San Diego, California 92121.

 

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Q: How can I attend the Entropic special meeting?

 

A: You are entitled to attend the Entropic special meeting only if you were an Entropic stockholder as of the record date or you hold a valid proxy for the Entropic special meeting. You must present an acceptable form of identification, such as a driver’s license, in order to gain admittance. If you are not a stockholder of record but hold shares as a beneficial owner in street name, you should provide proof of beneficial ownership as of the record date, such as an account statement, a copy of the voting instruction card provided by your broker, bank, or nominee, or other similar evidence of ownership. If you do not comply with the procedures outlined above, you may not be admitted to the special meeting.

 

Q: What items of business will be voted on at the Entropic special meeting?

 

A: The items of business scheduled to be voted on at the special meeting are as follows:

 

    To adopt the merger agreement (referred to as the merger proposal);

 

    To approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to Entropic’s named executive officers that is based on or otherwise related to the merger agreement and the transactions contemplated by the merger agreement (referred to as the compensation proposal); and

 

    To adjourn the Entropic special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to adopt the merger agreement (referred to as the Entropic adjournment proposal).

 

Q: How does the Entropic board recommend that I vote?

 

A: The Entropic board recommends that you vote your shares:

 

    “FOR” the merger proposal.

 

    “FOR” the compensation proposal.

 

    “FOR” the Entropic adjournment proposal.

 

Q: What shares can I vote at the Entropic special meeting?

 

A: Each share of Entropic common stock issued and outstanding as of the close of business on March 18, 2015, the record date for the special meeting of stockholders, is entitled to vote on all items being considered at the special meeting. You may vote all shares owned by you as of the record date, including (i) shares held directly in your name as the stockholder of record and (ii) shares held for you as the beneficial owner in street name through a broker, bank, or other nominee. On the record date, Entropic had 91,103,508 shares of common stock issued and outstanding.

If you hold Entropic shares in “street name,” you can vote your shares in the manner prescribed by your broker, bank, trust company or other nominee. Your broker, bank, trust company or other nominee has enclosed or otherwise provided a voting instruction card for you to use in directing such broker, bank, trust company or other nominee how to vote your shares. Without instructions from you, your broker, bank, trust company or other nominee cannot vote your shares.

 

Q: How many votes am I entitled to per share?

 

A: Each holder of shares of Entropic common stock will be entitled to one vote per share for each share of Entropic common stock held as of the record date.

 

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Q: How many shares must be present or represented to conduct business at the Entropic special meeting?

 

A: The quorum requirement for holding the Entropic special meeting and transacting business is that holders of a majority of Entropic’s outstanding shares of common stock entitled to vote at the special meeting, must be present in person or represented by proxy.

Abstentions and broker non-votes (if any) will be counted for purposes of determining the presence of a quorum for the Entropic special meeting.

Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed “non-routine.” Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. None of the proposals at the Entropic special meeting qualifies as “routine,” so brokers may not vote shares absent voting instructions from the beneficial owner.

 

Q: What is the voting requirement to approve each of the proposals?

 

A: The voting requirement for each proposal is as follows:

 

Proposal

  

Vote Required to Approve Proposal

To adopt the merger agreement.    The approval of the merger proposal requires the affirmative vote of a majority of the outstanding shares of Entropic’s common stock.
To approve, on an advisory (non-binding), basis the compensation that may be paid or become payable to Entropic’s named executive officers that is based on or otherwise relates to the merger agreement and the transactions contemplated by the merger agreement.    The approval of the compensation proposal requires the affirmative vote of a majority of the shares present at the meeting in person or by proxy.
To adjourn the Entropic special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to adopt the merger agreement.    The approval of the Entropic adjournment proposal requires the affirmative vote of a majority of the shares present at the meeting in person or by proxy.

Failure to vote in person or by proxy at the special meeting, abstentions, and broker non-votes (if any) will have the same effect as a vote “AGAINST” the merger proposal. Assuming a quorum is present, (i) abstentions will be treated as votes cast and, therefore, will have the same effect as a vote “AGAINST” the compensation proposal and the Entropic adjournment proposal and (ii) “broker non-votes” (if any) will have no effect on the outcome of the compensation proposal and the Entropic adjournment proposal.

 

Q: How can I contact Entropic’s transfer agent?

 

A: You may contact Entropic’s transfer agent by writing American Stock Transfer and Trust Company, LLC at 59 Maiden Lane, New York, New York 10038, by telephoning (800) 937-5449, or via www.amstock.com.

 

Q: How can I vote my shares in person at the Entropic special meeting?

 

A:

Shares held in your name as the stockholder of record may be voted by you in person at the special meeting. Shares held beneficially in street name may be voted by you in person at the special meeting only if you obtain

 

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  a legal proxy from the broker, bank, or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the special meeting, Entropic recommends that you also submit your proxy or voting instructions as described below under the question “How can I vote my shares without attending the Entropic special meeting” so that your vote will be counted if you later decide not to attend the meeting.

 

Q: How can I vote my shares without attending the Entropic special meeting?

 

A: By mail

Complete, sign and date the enclosed proxy card or voting instruction card and return it in the return envelope provided (which is postage prepaid if mailed in the United States) before the Entropic special meeting to be held at 10:00 a.m., local time, on April 30, 2015 in San Diego, California. If you are a stockholder of record and you return your signed proxy card but do not indicate your voting preferences, the shares represented by your proxy card will be voted as recommended by Entropic’s board of directors.

If you are a stockholder of record and the prepaid envelope is missing, please mail your completed proxy card to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

If you are a beneficial owner of shares, you should have received a proxy card and voting instructions with these proxy materials from your broker, bank or other nominee holder of record. Simply complete and mail the voting instruction card provided to the address provided by your broker, bank or other nominee holder of record.

You may still attend the special meeting in person even if you have already voted by proxy.

By telephone or on the Internet

If you are a stockholder of record, you may vote by following the telephone or Internet voting instructions on your proxy card.

Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day, 7 days a week, until 11:59 p.m., Eastern Time, on April 29, 2015. If you vote by telephone or the Internet, you do not have to return your proxy or voting instruction card.

If you are a beneficial owner of shares, your broker, bank or other holder of record may make telephone or Internet voting available to you. The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank or other nominee holder of record. Therefore, Entropic recommends that you follow the voting instructions in the materials you receive.

 

Q: Can I change my vote after I have submitted a proxy card or voting instruction card or revoke my proxy?

 

A: You may change your vote at any time prior to the taking of the vote at the special meeting. If you are the stockholder of record, you may change your vote by (i) granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method), (ii) providing a written notice of revocation to Entropic’s corporate secretary at Entropic Communications, Inc., 6350 Sequence Drive, San Diego, California 92121 prior to your shares being voted, or (iii) attending the special meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank, or nominee following the instructions they provided or, if you have obtained a legal proxy from your broker, bank, or nominee giving you the right to vote your shares, by attending the special meeting and voting in person.

 

Q: Is there a list of stockholders entitled to vote at the Entropic special meeting?

 

A: The names of stockholders of record entitled to vote at the Entropic special meeting will be available at the Entropic special meeting and for ten days prior to the special meeting for any purpose germane to the special meeting, between the hours of 9:00 a.m. and 4:30 p.m., local time, at Entropic’s principal executive offices located at 6350 Sequence Drive, San Diego, California 92121.

 

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Q: Should Entropic stock certificates be sent in now?

 

A: No. If the merger is completed, Entropic stockholders will receive written instructions for sending in any stock certificates they may have.

 

Q: Who can answer questions?

 

A: Entropic stockholders with questions about the merger or the proposals to be voted on at the Entropic special meeting or who desire additional copies of this joint proxy statement/prospectus or additional proxy cards should call MacKenzie Partners, Inc., Entropic’s proxy solicitor for the special meeting, toll-free at (800) 322-2885.

 

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SUMMARY

The following is a summary of the information contained in this joint proxy statement/prospectus relating to the merger, and may not contain all of the information about the merger that is important to you. For a more complete description of the merger, MaxLinear and Entropic encourage you to read carefully this entire joint proxy statement/prospectus, including the attached annexes. In addition, MaxLinear and Entropic encourage you to read the information incorporated by reference into this joint proxy statement/prospectus, which includes important business and financial information about MaxLinear and Entropic. Stockholders of MaxLinear and Entropic may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 192 of this joint proxy statement/prospectus.

MaxLinear and Entropic have agreed to the acquisition of Entropic by MaxLinear in accordance with terms of a merger agreement that is described in this joint proxy statement/prospectus. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

Information about the Companies

MaxLinear, Inc. (see page 48)

MaxLinear, Inc., a Delaware corporation and referred to in this joint proxy statement/prospectus as “MaxLinear,” is a provider of integrated, radio-frequency and mixed-signal integrated circuits for broadband communications applications and data center, metro, and long-haul transport network applications. Its high performance radio-frequency, or RF, receiver products capture and process digital and analog broadband signals to be decoded for various applications. These products include both RF receivers and RF receiver systems-on-chip, or SoCs, which incorporate MaxLinear’s highly integrated radio system architecture and the functionality necessary to receive and demodulate broadband signals and physical medium devices, or PMD’s, that provide a constant current source, current-to-voltage regulation, and data alignment and retiming functionality in optical interconnect applications. MaxLinear’s current products receive and process RF and digital signals and enable the display of broadband video content in a wide range of electronic devices, including cable and terrestrial and satellite set top boxes, DOCSIS data and voice gateways, hybrid analog and digital televisions, satellite low-noise blockers, or LNB’s, transponders or outdoor units (ODU), and optical modules for data center, metro, and long-haul transport network applications. MaxLinear’s Class A common stock is traded on the New York Stock Exchange (NYSE) under the symbol “MXL.” The principal executive offices of MaxLinear are located at 5966 La Place Court, Suite 100, Carlsbad, California 92008, and its telephone number is (760) 692-0711.

Entropic Communications, Inc. (see page 48)

Entropic Communications, Inc., a Delaware corporation and referred to in this joint proxy statement/prospectus as “Entropic,” is a world leader in semiconductor solutions for the connected home. It transforms how traditional HDTV broadcast and Internet Protocol, or IP, -based streaming video content is seamlessly, reliably, and securely delivered, processed, and distributed into and throughout the home. Entropic’s next-generation Set-top Box, or STB, System-on-a-Chip, or SoC, and home connectivity, or Connectivity, solutions enable global Pay-TV operators to offer consumers more captivating whole-home entertainment experiences by evolving the way digital entertainment is delivered, connected and consumed—in the home and on the go. Entropic’s shares of common stock currently trade on the Nasdaq Capital Market under the stock symbol “ENTR.” The principal executive offices of Entropic are located at 6350 Sequence Drive, San Diego, California 92121, and its telephone number is (858) 768-3600.

 

 

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Excalibur Acquisition Corporation and Excalibur Subsidiary, LLC (see page 49)

Excalibur Acquisition Corporation, a newly-formed, wholly-owned subsidiary of MaxLinear, is a Delaware corporation formed for the sole purpose of effecting the merger. Excalibur Subsidiary, LLC, a newly-formed, wholly-owned subsidiary of MaxLinear, is a Delaware limited liability company formed for the sole purpose of effecting the subsequent merger. Neither Excalibur Acquisition Corporation nor Excalibur Subsidiary, LLC has conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement, including the preparation of applicable regulatory filings in connection with the merger.

Market Price of MaxLinear Class A Common Stock and Entropic Common Stock

MaxLinear Class A common stock trades on the NYSE under the symbol “MXL.” Entropic common stock trades on the Nasdaq Capital Market under the symbol “ENTR.”

The high and low sales prices per share of MaxLinear Class A common stock on February 2, 2015, the last full trading day preceding public announcement that MaxLinear and Entropic had entered into the merger agreement, were $8.25 and $7.89, respectively. The high and low sales prices per share of Entropic common stock on February 2, 2015, the last full trading day preceding public announcement that MaxLinear and Entropic had entered into the merger agreement, were $2.6899 and $2.56, respectively

The high and low sales prices per share of MaxLinear Class A common stock on March 27, 2015, the last trading day before the date of this joint proxy statement/prospectus were $8.08 and $7.88. The high and low sales prices per share of Entropic common stock on March 27, 2015, the last trading day before the date of this joint proxy statement/prospectus, were $2.95 and $2.90.

The MaxLinear Special Meeting (See page 50)

The special meeting of MaxLinear stockholders will be held at 8:30 a.m., local time, on April 30, 2015, at MaxLinear’s principal executive offices located at 5966 La Place Court, Suite 100, Carlsbad, California 92008. The MaxLinear board has fixed the close of business on March 30, 2015, as the record date for determination of the stockholders entitled to vote at the MaxLinear special meeting.

Proposal 1: The Share Issuance Proposal (see page 55)

MaxLinear stockholders are voting on a proposal to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement (referred to as the share issuance proposal). The MaxLinear board unanimously recommends a vote “FOR” the share issuance proposal.

Proposal 2: The MaxLinear Adjournment Proposal (see page 56)

MaxLinear stockholders are voting on a proposal to adjourn the MaxLinear special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the share issuance proposal (referred to as the MaxLinear adjournment proposal). The MaxLinear board unanimously recommends a vote “FOR” the MaxLinear adjournment proposal.

Required Vote. To approve the share issuance proposal and the MaxLinear adjournment proposal, the affirmative vote of a majority of the votes cast at the MaxLinear special meeting by holders of shares of MaxLinear Class A common stock and Class B common stock, voting together as a single class, is required. Assuming a quorum is present, abstentions will be treated as votes cast and, therefore, will have the same effect as a vote “AGAINST” each proposal and “broker non-votes” (if any) will have no effect on the outcome of the proposals.

 

 

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Stock Ownership of MaxLinear Directors and Executive Officers. At the record date for the MaxLinear special meeting (the close of business on March 30, 2015), MaxLinear’s directors and executive officers and their affiliates beneficially owned and had the right to vote 976,045 shares of Class A common stock and 4,673,786 shares of Class B common stock, which represents approximately 14.8% of the total shares entitled to vote at the MaxLinear special meeting.

The Entropic Special Meeting (See page 57)

The special meeting of Entropic stockholders will be held at 10:00 a.m., local time, on April 30, 2015, at Entropic’s principal executive offices located at 6350 Sequence Drive, San Diego, California 92121. The Entropic board has fixed the close of business on March 18, 2015, as the record date for determination of the stockholders entitled to vote at the Entropic special meeting.

Proposal 1: The Merger Proposal (see page 62)

Entropic stockholders are voting on a proposal to adopt the merger agreement (referred to as the merger proposal). The Entropic board unanimously recommends a vote “FOR” the merger proposal.

Proposal 2: The Compensation Proposal (see page 63)

Entropic stockholders are voting on a proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to Entropic’s named executive officers that is based on or otherwise relates to the merger agreement and the transactions contemplated by the merger agreement (referred to as the compensation proposal). This compensation is summarized in the section entitled “Interests of the Directors and Executive Officers of Entropic in the Merger— Golden Parachute Table” beginning on page 129 of this joint proxy statement/prospectus, including the footnotes to the table. The Entropic board unanimously recommends a vote “FOR” the compensation proposal.

Proposal 3: The Entropic Adjournment Proposal (see page 64)

Entropic stockholders are voting on a proposal to adjourn the Entropic special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the merger proposal (referred to as the Entropic adjournment proposal). The Entropic board unanimously recommends a vote “FOR” the Entropic adjournment proposal.

Required Vote. To approve the merger proposal, the affirmative vote of a majority of the outstanding shares of Entropic’s common stock is required. Failure to vote in person or by proxy at the special meeting, abstentions, and broker non-votes (if any) will have the same effect as a vote “AGAINST” the merger proposal.

To approve the compensation proposal and the Entropic adjournment proposal, the affirmative vote of a majority of the shares present at the special meeting in person or by proxy, is required. Assuming a quorum is present, abstentions will have the same effect as a vote “AGAINST” the compensation proposal and the Entropic adjournment proposal and “broker non-votes” (if any) will have no effect on the outcome of such proposals.

Stock Ownership of Entropic Directors and Executive Officers. At the record date for the Entropic special meeting (the close of business on March 18, 2015), Entropic’s directors and executive officers and their affiliates beneficially owned and had the right to vote 621,764 shares of common stock, which represents approximately 0.7% of the total shares entitled to vote at the Entropic special meeting.

 

 

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The Merger (See page 65)

Under the terms of the merger agreement, Excalibur Acquisition Corporation will merge with and into Entropic and Entropic will continue as the surviving corporation. As soon as practicable thereafter, Entropic will merge with and into Excalibur Subsidiary, LLC and Excalibur Subsidiary, LLC will continue as the surviving company and as a wholly-owned subsidiary of MaxLinear. MaxLinear and Entropic expect to complete the merger after all of the conditions to completion of the merger contained in the merger agreement are satisfied or waived, including after receiving stockholder approvals at the meetings of the MaxLinear and Entropic stockholders. The conditions to completion of the merger are described in the section entitled “The Merger Agreement—Conditions to Obligations to Complete the Merger.” MaxLinear and Entropic currently expect to complete the merger promptly after the stockholder meetings. However, it is possible that factors outside of the control of MaxLinear and Entropic could require MaxLinear and Entropic to complete the merger at a later time or not complete the merger at all.

What Entropic Stockholders Will Receive in the Merger (See page 136)

Upon completion of the merger, each share of Entropic common stock outstanding immediately prior to the effective time of the merger (other than those shares for which appraisal rights are validly perfected or those shares owned by MaxLinear or Entropic or their respective subsidiaries or held in treasury of Entropic, such shares collectively referred to as the excluded shares) will be canceled and converted into the right to receive (i) $1.20 in cash, without interest, (ii) 0.2200 of a share of MaxLinear Class A common stock, and (iii) cash payable in lieu of any fractional shares (collectively referred to as the merger consideration).

The cash portion of the merger consideration will be derived from Entropic’s cash and, if necessary, MaxLinear’s cash, in accordance with the terms of the merger agreement. Specifically, under the merger agreement, at or prior to the effective time, Entropic will deposit with the exchange agent an aggregate amount of cash as directed by MaxLinear (not to exceed the aggregate amount of cash then held by Entropic and its subsidiaries, less $10,000,000) and MaxLinear will deposit with the exchange agent an aggregate amount of cash equal to the remaining amount of cash required to pay the cash portion of the merger consideration under the merger agreement.

Ownership of MaxLinear Following Completion of the Merger

MaxLinear estimates that it may issue up to approximately 20.6 million shares of its Class A common stock to current holders of Entropic’s common stock in the merger pursuant to the terms of the merger agreement. Immediately following completion of the merger, existing holders of MaxLinear capital stock are expected to hold approximately 65% of MaxLinear’s outstanding capital stock and current holders of Entropic common stock are expected to hold approximately 35% of MaxLinear’s outstanding capital stock. This information is based on the number of MaxLinear and Entropic shares outstanding and Entropic equity-based awards vested and expected to vest as of January 29, 2015. The actual number of shares of MaxLinear Class A common stock to be issued pursuant to the terms of the merger agreement will be determined at completion of the merger based on the stock exchange ratio of 0.2200 of a share of MaxLinear Class A common stock and the number of shares of Entropic common stock outstanding at that time.

Treatment of Entropic Equity Awards and Employee Stock Purchase Plan (See page 137)

At the effective time of the merger, each then outstanding option to purchase shares of Entropic common stock, whether or not exercisable or vested that is held by any employee, director or consultant of Entropic (or its subsidiaries) as of immediately prior to the completion of the merger who remains or becomes an employee, director or consultant of MaxLinear or Entropic or their respective subsidiaries immediately after the completion of the merger (referred to as a continuing service provider), will be assumed by MaxLinear and converted into an option to acquire MaxLinear Class A common stock, on the same terms and conditions as were applicable to such Entropic stock option immediately prior to the effective time of the merger, except that the number of

 

 

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shares for which such option is or may become exercisable will equal the number of shares of Entropic common stock subject to the option as of immediately prior to the effective time of the merger multiplied by the option exchange ratio (with the resulting number rounded down to the nearest whole share of MaxLinear Class A common stock) and the exercise price of the assumed option will equal the quotient obtained by dividing the per share exercise price of the assumed option immediately prior to the effective time of the merger, by the option exchange ratio (which resulting price per share will be rounded up to the nearest whole cent). Each assumed stock option that qualified as an incentive stock option will continue to qualify as an incentive stock option to the extent possible. Each option to purchase shares of Entropic common stock that is outstanding and unexercised immediately prior to the effective time of the merger and is held by a non-continuing service provider (including non-continuing members of Entropic’s board of directors other than Theodore Tewksbury Ph.D.) will not be assumed by MaxLinear and will be cancelled for no consideration and have no further effect following the effective time of the merger, provided that under the terms of Entropic’s 2007 Equity Incentive Plan, options that are held by participants whose continuous service to Entropic has not terminated prior to the effective time of the merger and are not being assumed will fully vest. In addition, stock options held by members of the board of directors of Entropic that were granted under Entropic’s 2007 Non-Employee Directors’ Stock Option Plan will fully vest in connection with the merger under the terms of the option agreements that such options were granted pursuant to. Each non-continuing service provider must exercise his or her options prior to the effective time of the merger to receive any merger consideration.

At the effective time of the merger, each then outstanding Entropic restricted stock unit award and performance stock unit award that is held by a continuing service provider and that is solely subject to time-based vesting, or with respect to performance stock unit awards, that convert into awards as of the effective time of the merger that is solely subject to time-based vesting following the closing, whether or not then vested or issuable, will be assumed by MaxLinear and converted into an award to receive shares of MaxLinear Class A common stock on the same terms and conditions that were applicable to such Entropic restricted stock unit award or performance stock unit award prior to the effective time of the merger, except that the number of shares subject to the award will be adjusted such that the number of shares of Entropic common stock subject to the assumed award immediately prior to the effective time will be multiplied by the option exchange ratio (with the resulting number rounded down to the nearest whole share of MaxLinear Class A common stock). Each restricted stock unit award and performance stock unit award that is outstanding immediately prior to the effective time of the merger and is held by a non-continuing service provider will not be assumed by MaxLinear and will be cancelled for no consideration and have no further effect following the effective time of the merger, provided that under the terms of Entropic’s 2007 Equity Incentive Plan, restricted stock units that are held by participants whose continuous service to Entropic has not terminated prior to the effective time of the merger and are not being assumed will fully vest. In addition, all or a portion of the restricted stock units held by certain named executive officers may or will vest upon the effective time of the merger as described in more detail in the section entitled “The Merger Agreement—Treatment of Entropic Equity Awards” beginning on page 137. The number of performance stock units that will be considered assumed units will be calculated in accordance with the terms of the merger agreement and all other performance stock units will be cancelled for no consideration and have no further effect following the effective time of the merger.

The current offering in progress under Entropic’s 2007 Employee Stock Purchase Plan as of the date of the merger agreement will be the final offering under Entropic’s 2007 Employee Stock Purchase Plan. If such offering has not ended prior to the effective time of the merger, then Entropic will take all actions necessary such that a date to be determined by Entropic in accordance with the terms of Entropic’s 2007 Employee Stock Purchase Plan (but prior to the effective time of the merger) will be the last day of such offering and the participant’s rights under such offering will terminate immediately after such purchase. Unless it has earlier terminated, Entropic will take all actions necessary so that the Entropic 2007 Employee Stock Purchase Plan will terminate immediately prior to and effective upon the effective time of the merger. All amounts withheld by

 

 

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Entropic on behalf of the participants in Entropic’s 2007 Employee Stock Purchase Plan that have not been used to purchase Entropic common stock at or prior to the effective time of the merger will be returned to the participants without interest pursuant to the terms of the plan.

Recommendation of the MaxLinear Board (See page 80)

At a meeting of the MaxLinear board held on February 3, 2015, the MaxLinear board unanimously determined that the merger agreement and the merger and the other transactions contemplated thereby are advisable and in the best interests of the MaxLinear stockholders, and unanimously approved and adopted the merger agreement.

The MaxLinear board unanimously recommends that MaxLinear stockholders vote “FOR” the share issuance proposal and “FOR” the MaxLinear adjournment proposal.

Opinion of MaxLinear’s Financial Advisor (See page 82 and Annex B)

On February 3, 2015, Stifel, Nicolaus & Company, Incorporated (referred to as Stifel), MaxLinear’s financial advisor, rendered an opinion to the MaxLinear board that the merger consideration of (i) $1.20 in cash, without interest, plus (ii) 0.2200 of a share of Class A common stock of MaxLinear plus (iii) cash payable in lieu of any fractional shares of Class A common stock of MaxLinear issuable in the merger pursuant to the terms of the merger agreement, to be paid by MaxLinear to holders of Merger Shares (defined as shares of Entropic common stock (other than (a) any shares of Entropic common stock owned by MaxLinear or any subsidiary of MaxLinear or Entropic or held in treasury of Entropic and (b) any shares of Entropic common stock issued and outstanding immediately prior to the effective time of the merger held by an Entropic stockholder who has sought appraisal for such shares in accordance with applicable Delaware law and the merger agreement)) in the merger pursuant to the terms of the merger agreement was fair, from a financial point of view, to MaxLinear, as of such date, based upon and subject to the procedures followed, assumptions made, qualifications, and limitations on the review undertaken and other matters considered by Stifel in preparing its opinion. Stifel’s opinion did not address any other aspect or implication of the merger and the subsequent merger or any other agreement, arrangement, or understanding entered into in connection with the merger or the subsequent merger or otherwise. The full text of Stifel’s opinion, dated February 3, 2015, which sets forth, among other things, the procedures followed, assumptions made, matters considered, and limitations on the scope of the review undertaken by Stifel in connection with its opinion, is attached as Annex B to this joint proxy statement/prospectus and is incorporated into this joint proxy statement/prospectus by reference in its entirety. Stifel’s opinion was provided for the information of the MaxLinear board in connection with its consideration of the merger and the subsequent merger and Stifel’s opinion does not constitute advice or a recommendation to any stockholder of MaxLinear or Entropic as to how such person should vote or act on any matter relating to the merger or the subsequent merger. See “The Merger—Opinion of MaxLinear’s Financial Advisor” beginning on page 82 for additional information.

MaxLinear encourages you to carefully read Stifel’s opinion.

Recommendation of the Entropic Board (See page 99)

At a meeting of the Entropic board held on February 3, 2015, the Entropic board unanimously determined that the merger agreement and the merger and the other transactions contemplated thereby are advisable and fair to and in the best interests of Entropic and the Entropic stockholders, and unanimously approved and adopted the merger agreement and approved the merger and the other transactions contemplated by the merger agreement.

The Entropic board unanimously recommends that the Entropic stockholders vote “FOR” the merger proposal, “FOR” the compensation proposal, and “FOR” the Entropic adjournment proposal.

 

 

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Opinion of Entropic’s Financial Advisor (See page 100 and Annex C)

In connection with the proposed transaction, Entropic’s board of directors received a written opinion dated February 3, 2015, of Barclays Capital Inc., which is referred to as Barclays, that as of such date and based upon and subject to the qualifications, limitations and assumptions stated in its opinion, the merger consideration to be offered to the stockholders of Entropic (other than directors and executive officers of Entropic who are executing certain voting agreements in favor of MaxLinear in connection with the merger agreement) in the merger is fair, from a financial point of view, to such stockholders. As compensation for its services in connection with the proposed transaction, Entropic has agreed to pay Barclays’ fees, which are currently estimated to be approximately $5.1 million, of which $500,000 became payable upon the delivery of Barclays’ opinion, and the remainder of which will become payable solely upon the consummation of the proposed transaction. The full text of Barclays’ written opinion, dated February 3, 2015, is attached to this joint proxy statement/prospectus as Annex C. Entropic stockholders are encouraged to read Barclays’ written opinion carefully in its entirety for a description of, among other things, the assumptions made, procedures followed, and factors and limitations considered upon the review undertaken by Barclays in rendering its opinion.

Barclays’ opinion was provided for the benefit of Entropic’s board of directors (in its capacity as such) in connection with, and for the purpose of, its evaluation of the merger consideration from a financial point of view and did not address any other aspect of the proposed transaction. The opinion did not address the relative merits of the proposed transaction as compared to other business strategies or transactions that might be available with respect to Entropic or Entropic’s underlying business decision to effect the proposed transaction. The opinion does not constitute a recommendation to any stockholder as to how to vote or act with respect to the proposed transaction. Please see “The Merger—Opinion of Entropic’s Financial Advisor” beginning at page 100.

Entropic encourages you to carefully read Barclays’ opinion.

Interests of the Directors and Executive Officers of Entropic in the Merger (See page 124)

In considering the recommendation of the Entropic board to adopt the merger agreement, Entropic stockholders should be aware that some of the Entropic directors and executive officers have interests in the merger and have arrangements that are different from, or in addition to, those of Entropic stockholders generally, including, but not limited to, the following:

 

    Entropic has entered into Change of Control Severance Agreements with certain employees, including its executive officers, entitling them to certain payments and vesting acceleration in connection with a qualifying termination of employment following a change of control of Entropic;

 

    Entropic has entered into agreements with certain executive officers entitling them to certain payments in connection with their employment through the completion of the merger;

 

    directors and executive officers of Entropic may be entitled to vesting acceleration upon specified circumstances and in connection with a change of control under various equity awards and agreements;

 

    in connection with the merger, MaxLinear will assume outstanding options to purchase shares of Entropic common stock and restricted stock units and certain performance stock units of those executive officers who will continue to provide such services following the completion of the merger;

 

    directors and officers will be indemnified by the surviving Entropic company following completion of the merger with respect to acts or omissions by them in their capacities as such prior to the effective time of the merger; and

 

    under the terms of the merger agreement, one Entropic director, Theodore Tewksbury, Ph.D., will be designated to serve on the board of MaxLinear after the effective time of the merger.

 

 

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These interests and arrangements may create potential conflicts of interest. The Entropic board was aware of these potential conflicts of interest and considered them, among other matters, in reaching its decision to approve the merger agreement, the merger, and the other transactions contemplated by the merger agreement.

The Merger Agreement (See page 135)

No Solicitation (see page 143)

Subject to limited exceptions, the merger agreement contains detailed provisions that prohibit MaxLinear and Entropic from soliciting, initiating, knowingly encouraging or knowingly facilitating alternative acquisition proposals with any third party including but not limited to the following:

 

    any acquisition or purchase of a 15% or greater interest in the total outstanding equity interests or voting securities of MaxLinear or Entropic;

 

    any acquisition or purchase of 50% or more of any class of equity or other voting securities of one or more subsidiaries of MaxLinear or Entropic, the business(es) of which, individually or in the aggregate, generate 15% or more of the net revenues, net income or assets of MaxLinear or Entropic;

 

    any merger, consolidation, business combination or other similar transaction involving MaxLinear or Entropic or pursuant to which the stockholders of MaxLinear or Entropic hold immediately preceding such transaction less than 85% of the equity interests of the surviving entity;

 

    subject to certain exceptions, any sale, lease, exchange, transfer, license, acquisition or disposition of assets of MaxLinear or Entropic that generate or constitute 15% or more of the net revenues, net income or assets of MaxLinear or Entropic; or

 

    any liquidation, dissolution or other significant corporation reorganization of MaxLinear or Entropic or one or more of their subsidiaries that generate or constitute 15% or more of the net revenues, net income or assets of MaxLinear or Entropic.

The merger agreement does not, however, prohibit either party from considering a bona fide, unsolicited acquisition proposal from a third party if specified conditions are met.

MaxLinear Board of Directors

On or prior to the effective time of the merger, MaxLinear’s board will be increased to seven members, the new seat will be allocated as a Class II director, and Dr. Theodore Tewksbury, a current Entropic board member, will be appointed to MaxLinear’s board to fill the vacancy created by such increase.

Conditions to Obligations to Complete the Merger (see page 151)

Several conditions must be satisfied or waived before MaxLinear and Entropic complete the merger, including, but not limited to, the following:

 

    approval by MaxLinear stockholders of the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement;

 

    adoption of the merger agreement by Entropic stockholders;

 

    no law that has the effect of making the merger illegal or prohibiting the completion of the merger will be in effect;

 

    no order of any court preventing the completion of the merger will be in effect;

 

    MaxLinear’s registration statement on Form S-4, of which this joint proxy statement/prospectus is a part, will have been declared effective by the Securities and Exchange Commission;

 

 

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    expiration or termination of any applicable mandatory foreign antitrust laws and receipt of all clearances, consents, approvals, authorizations and orders applicable to the merger which are required under any antitrust laws (other than those that are not material to MaxLinear or Entropic) or that are required under applicable mandatory foreign antitrust laws;

 

    receipt of opinions by MaxLinear and Entropic from their respective outside tax counsel that the merger, together with the subsequent merger, will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code;

 

    the shares of MaxLinear Class A common stock issuable in the merger and the shares of MaxLinear Class A common stock issuable upon exercise of the assumed stock options or settlement of the assumed units will be authorized for listing on the New York Stock Exchange;

 

    accuracy of each party’s respective representations and warranties in the manner set forth in the merger agreement;

 

    material compliance by each party with its agreements and covenants in the merger agreement;

 

    absence of a material adverse effect on MaxLinear and Entropic, respectively, from February 3, 2015 to the completion of the merger; and

 

    holders of no more than 15% of the outstanding shares of Entropic stock shall have exercised statutory rights of dissent under Delaware law in connection with the merger.

Termination; Fees and Expenses (see page 154)

Under circumstances specified in the merger agreement, either MaxLinear or Entropic may terminate the merger agreement, including, but not limited to, if:

 

    both parties consent to termination;

 

    by MaxLinear or Entropic if the merger is not completed by August 3, 2015;

 

    any governmental authority has issued or granted any order that is in effect and has the effect of making the merger illegal or which has the permanent effect of prohibiting the completion of the merger, and such order has become final and non-appealable;

 

    the required approval of the stockholders of MaxLinear of the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement has not been obtained at MaxLinear’s duly held special meeting;

 

    the required approval of the stockholders of Entropic to adopt the merger agreement has not been obtained at Entropic’s duly held special meeting;

 

    the other party or its board of directors takes any of the actions described as a “triggering event” in the merger agreement;

 

    the other party breaches its representations, warranties or covenants in the merger agreement such that one or more of its conditions to completion of the merger regarding representations, warranties or covenants would not be satisfied; or

 

    a party’s board of directors has effected a board recommendation change in accordance with the terms of the merger agreement in order to accept a superior proposal and such party terminates the merger agreement in accordance with the terms of the merger agreement.

Voting Agreements (See page 158)

Simultaneously with the execution and delivery of the merger agreement, certain of the executive officers and directors of MaxLinear (or, in some cases, their affiliated entities), in their respective capacities as

 

 

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stockholders of MaxLinear, entered into voting agreements with Entropic, pursuant to which such stockholders agreed, among other things, to vote their respective shares of Class A common stock and Class B common stock of MaxLinear in favor of the approval of the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement, and against any inquiry, proposal, offer, indication of interest or transaction that constitutes, or could reasonably be expected to lead to, an acquisition proposal relating to MaxLinear. As of February 3, 2015, the stockholders signing the MaxLinear voting agreements owned an aggregate of approximately (i) 14% of the outstanding shares of MaxLinear Class A common stock and Class B common stock, calculated in the aggregate and (ii) 67% of the outstanding shares of MaxLinear Class B common stock that are entitled to 10 votes per share with respect to transactions that would result in a change of control of MaxLinear (including any transaction that would constitute a “superior proposal” under the terms of the merger agreement). The obligations under the voting agreements with MaxLinear terminate in certain circumstances, including in the event that the board of directors of MaxLinear has effected a board recommendation change in accordance with the terms of the merger agreement.

Simultaneously with the execution and delivery of the merger agreement, each of the executive officers and directors of Entropic, in their respective capacities as stockholders of Entropic, entered into voting agreements with MaxLinear, pursuant to which such stockholders agreed, among other things, to vote their respective shares of common stock of Entropic for the adoption of the merger agreement, and against any inquiry, proposal, offer, indication of interest or transaction that constitutes or could reasonably be expected to lead to an acquisition proposal relating to Entropic. As of February 3, 2015, the stockholders signing the Entropic voting agreements beneficially owned an aggregate of approximately 0.68% of the outstanding Entropic common stock. The obligations under the voting agreements with Entropic terminate in certain circumstances, including in the event that the board of directors of Entropic has effected a board recommendation change in accordance with the terms of the merger agreement.

Accounting Treatment of the Transaction (See page 118)

MaxLinear will account for the acquisition pursuant to the merger agreement using the acquisition method of accounting in accordance with U.S. generally accepted accounting principles (referred to in this joint proxy statement/prospectus as GAAP). MaxLinear will measure the assets acquired and liabilities assumed at their fair values including net tangible and identifiable intangible assets acquired and liabilities assumed as of the closing of the transactions. Any excess of the purchase price over those fair values will be recorded as goodwill.

Definite lived intangible assets will be amortized over their estimated useful lives. Intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually. All intangible assets and goodwill are also tested for impairment when certain indicators are present.

The purchase price reflected in the unaudited pro forma combined financial statements is based on preliminary estimates using assumptions MaxLinear management believes are reasonable based on currently available information. The final purchase price and fair value assessment of assets and liabilities will be based in part on a detailed valuation which has not yet been completed.

Material U.S. Federal Income Tax Consequences of the Transaction (See page 118)

MaxLinear and Entropic intend that the merger, together with the subsequent merger (collectively referred to as the integrated merger) will qualify as a “reorganization” for U.S. federal income tax purposes within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, or the Code, and it is a condition to the consummation of the merger that each of MaxLinear and Entropic receive an opinion from legal counsel to that effect. If the integrated merger so qualifies, an Entropic stockholder that is a U.S. person generally will recognize gain (but not loss) in an amount equal to the lesser of (i) the amount of cash received in the integrated merger (excluding any cash received in lieu of a fractional share of MaxLinear Class A common stock), and

 

 

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(ii) the excess, if any, of (a) the sum of the amount of such cash and the fair market value of the MaxLinear Class A common stock received in the integrated merger over (b) the stockholder’s tax basis in its shares of Entropic common stock. An Entropic stockholder that is a U.S. person receiving cash in the merger in lieu of a fractional share of MaxLinear Class A common stock will be treated as if such fractional share were issued in the integrated merger and then redeemed by MaxLinear for cash, resulting in a recognition of gain or loss equal to the difference, if any, between the stockholder’s basis allocable to the fractional share and the amount of cash received. Any gain recognized generally will be long-term capital gain if, as of the date of the integrated merger, the shares of Entropic common stock exchanged in the transaction were held for more than one year.

Tax matters can be complicated, and the tax consequences of the integrated merger to a particular stockholder will depend in part on such stockholder’s circumstances. Thus, Entropic stockholders are urged to read the discussion in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Transaction” beginning on page 181 of this joint proxy statement/prospectus for a more complete discussion of the U.S. federal income tax consequences of the integrated merger and to consult their tax advisors as to the U.S. federal income tax consequences of the transaction, as well as the effects of state, local, non-U.S. and non-income tax laws.

Regulatory Filings and Approvals Required to Complete the Merger (See page 121)

MaxLinear and Entropic have each agreed to use their reasonable best efforts to obtain all regulatory approvals required to complete the merger. The merger is subject to review by the United States Federal Trade Commission (FTC) and the Antitrust Division of the United States Department of Justice (DOJ) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSR Act. Under this statute, MaxLinear and Entropic are required to make pre-merger notification filings and await the expiration or early termination of the statutory waiting period prior to completing the merger. On February 18, 2015, each of MaxLinear and Entropic filed a Pre-Merger Notification and Report Form pursuant to the HSR Act with the FTC and the Antitrust Division of the DOJ. The waiting period under the HSR Act was terminated by the United States Federal Trade Commission on February 26, 2015. For further discussion of the regulatory filings and approvals required to complete the merger, see “The Merger—Regulatory Filings and Approvals Required to Complete the Merger” beginning on page 121 of this joint proxy statement/prospectus.

MaxLinear Stockholders Will Not Have Appraisal Rights in Connection with the Merger (See page 122)

Under Delaware law, MaxLinear stockholders are not entitled to appraisal rights in connection with the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement. It is anticipated that shares of MaxLinear Class A common stock will continue to be traded on the NYSE during the pendency of and following the effectiveness of the merger, and MaxLinear’s corporate status will not change because the merger is being consummated between its subsidiaries and Entropic.

Entropic Stockholders Will Have Appraisal Rights in Connection with the Merger (See page 122)

Entropic stockholders are entitled to appraisal rights under Section 262 of the Delaware General Corporation Law (DGCL) provided they fully comply with and follow the procedures and satisfy all of the conditions set forth in Section 262 of the DGCL. For more information regarding appraisal rights and how to perfect your appraisal rights, see the section entitled “Appraisal Rights of Entropic Stockholders” beginning on page 187 of this joint proxy statement/prospectus. In addition, a copy of Section 262 of the DGCL is attached as Annex D to this joint proxy statement/prospectus. Failure to comply with Section  262 of the DGCL will result in your waiver of, and inability to exercise, appraisal rights.

Rights of Entropic Stockholders Will Change as a Result of the Merger

Entropic stockholders will have different rights once they become MaxLinear stockholders due to differences between the organizational documents of MaxLinear and Entropic, including the fact that MaxLinear

 

 

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has two classes of common stock and Entropic has only one class of common stock. Upon completion of the merger, Entropic stockholders will be issued shares of MaxLinear Class A common stock which are entitled to one vote per share. MaxLinear also has shares of Class B common stock outstanding that are entitled to (i) ten votes per share with respect to transactions that would result in a change of control of MaxLinear (including certain transactions that would constitute a “superior proposal” under the terms of the merger agreement) or, in certain cases that relate to MaxLinear’s equity incentive plans and (ii) to vote as a separate class on certain matters. These differences are described in more detail under “Comparison of Rights of Stockholders of MaxLinear and Entropic” beginning on page 177 of this joint proxy statement/prospectus.

Risk Factors (See page 34)

There are a number of risks relating to the merger and to the existing businesses of each of MaxLinear and Entropic on a standalone basis, and to the business of MaxLinear following completion of the acquisition. See “Risk Factors” beginning on page 34 of this joint proxy statement/prospectus for a discussion of these and other risks and see also the documents that MaxLinear and Entropic have filed with the SEC that are incorporated by reference into this joint proxy statement/prospectus.

Delisting and Deregistration of Entropic Common Stock After the Merger

Following the effective time of the merger, Entropic common stock will be delisted from the Nasdaq Capital Market and deregistered under the Securities Exchange Act of 1934, as amended.

Registration of Shares of MaxLinear Class A Common Stock Received in the Merger

The shares of MaxLinear Class A common stock to be issued in the merger pursuant to the terms of the merger agreement will be registered under the Securities Act of 1933 and will be freely transferable. The resale restrictions in Rule 145(d) that could be applicable to persons specified in Rule 145(c), as amended, are not applicable to persons receiving stock in the merger.

Additional Information—Certain Litigation Relating to the Merger

The Delaware Actions

Beginning on February 9, 2015, eleven stockholder class action complaints (captioned Langholz v. Entropic Communications, Inc., et al., C.A. No. 10631-VCP (filed Feb. 9, 2015); Tomblin v. Entropic Communications, Inc., C.A. No. 10632-VCP (filed Feb. 9, 2015); Crill v. Entropic Communications, Inc., et al., C.A. No. 10640-VCP (filed Feb. 11, 2015); Wohl v. Entropic Communications, Inc., et al., C.A. No. 10644-VCP (filed Feb. 11, 2015); Parshall v. Entropic Communications, Inc., et al., C.A. No. 10652-VCP (filed Feb. 12, 2015); Saggar v. Padval, et al., C.A. No. 10661-VCP (filed Feb. 13, 2015); Iyer v. Tewksbury, et al., C.A. No. 10665-VCP (filed Feb. 13, 2015); Respler v. Entropic Communications, Inc., et al., C.A. No. 10669-VCP (filed Feb. 17, 2015); Gal v. Entropic Communications, Inc., et al., C.A. No. 10671-VCP (filed Feb. 17, 2015); Werbowsky v. Padval, et al., C.A. No. 10673-VCP (filed Feb. 18, 2015); and Agosti v. Entropic Communications, Inc., C.A. No. 10676-VCP (filed Feb. 18, 2015)) were filed in the Court of Chancery of the State of Delaware on behalf of a putative class of Entropic Communications, Inc. stockholders. The complaints name Entropic, the board of directors of Entropic, MaxLinear, Excalibur Acquisition Corporation, and Excalibur Subsidiary, LLC as defendants. The complaints generally allege that, in connection with the proposed acquisition of Entropic by MaxLinear, the individual defendants breached their fiduciary duties to Entropic stockholders by, among other things, purportedly failing to take steps to maximize the value of Entropic to its stockholders and agreeing to allegedly preclusive deal protection devices in the merger agreement. The complaints further allege that Entropic, MaxLinear, and/or the merger subsidiaries aided and abetted the individual defendants in the alleged breaches of their fiduciary duties. The complaints seek, among other things, an order enjoining the defendants from

 

 

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consummating the proposed transaction, an order declaring the merger agreement unlawful and unenforceable, in the event that the proposed transaction is consummated, an order rescinding it and setting it aside or awarding rescissory damages to the class, imposition of a constructive trust, damages, and/or attorneys’ fees and costs.

The California State Court Actions

Beginning on February 10, 2015, two stockholder class action complaints (captioned Krasinski v. Entropic Communications, Inc., et al., Case No. 37-2015-00004613-CU-SL-CTL (filed Feb. 10, 2015); and Khoury v. Entropic Communications, Inc., et al., Case No. 37-2015-00004737-CU-SL-CTL (filed Feb. 11, 2015)) were filed in the Superior Court of the State of California County of San Diego on behalf of a putative class of Entropic stockholders. The complaints name Entropic, the board of directors of Entropic, MaxLinear, Excalibur Acquisition Corporation, and Excalibur Subsidiary, LLC as defendants. The complaints generally allege that, in connection with the proposed acquisition of Entropic by MaxLinear, the individual defendants breached their fiduciary duties to Entropic stockholders by, among other things, purportedly failing to take steps to maximize the value of Entropic to its stockholders and agreeing to allegedly preclusive deal protection devices in the merger agreement. The complaints further allege that MaxLinear and the merger subsidiaries aided and abetted the individual defendants in the alleged breaches of their fiduciary duties. The complaints seek, among other things, an order enjoining the defendants from consummating the proposed transaction, an order rescinding, to the extent already implemented, the proposed transaction or any of its terms, and awarding plaintiffs costs, including attorneys’ and experts’ fees.

On March 16, 2015, the court entered an order granting the plaintiff’s request to dismiss the Khoury action without prejudice. On March 19, 2015, the court entered an order granting the plaintiff’s request to dismiss the Krasinski action without prejudice.

The California Federal Court Actions

Beginning on February 25, 2015, two stockholder complaints (captioned Badolato v. MaxLinear, Inc., et al., Case No. 15-cv-0426-BAS (filed Feb. 25, 2015); and Mouw v. MaxLinear, Inc., et al., Case No. 15-cv-0464-WQH (filed Mar. 2, 2015)) were filed in the United States District Court for the Southern District of California on behalf of a putative class of Entropic stockholders and, derivatively, on behalf of Entropic. The complaints name the board of directors of Entropic, MaxLinear, Excalibur Acquisition Corporation, and Excalibur Subsidiary, LLC as defendants, and name Entropic as a nominal party. The complaints generally allege that, in connection with the proposed acquisition of Entropic by MaxLinear, the individual defendants breached their fiduciary duties to Entropic stockholders by, among other things, purportedly failing to take steps to maximize the value of Entropic to its stockholders and agreeing to allegedly preclusive deal protection devices in the merger agreement. The complaints further allege that MaxLinear and the merger subsidiaries aided and abetted the individual defendants in the alleged breaches of their fiduciary duties. The complaints seek, among other things, an order enjoining the defendants from consummating the proposed transaction, an order rescinding, to the extent already implemented, the proposed transaction or any of its terms, and awarding plaintiffs costs, including attorneys’ and experts’ fees. On March 6, 2015, the Entropic and the individual defendants in the Badolato action filed a motion to dismiss the complaint for forum non conveniens because Entropic’s bylaws contain a mandatory forum selection clause mandating that shareholder actions, such as this, be brought in state court in Delaware.

 

 

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SELECTED HISTORICAL FINANCIAL DATA OF MAXLINEAR

In the table below, MaxLinear provides you with summary historical financial data of MaxLinear. MaxLinear has prepared this information using the consolidated financial statements of MaxLinear for the five years ended December 31, 2014. The financial statements for the five fiscal years ended December 31, 2014 have been audited by Ernst & Young LLP, independent registered public accounting firm.

When you read this summary historical financial data, it is important that you read it together with the historical financial statements and related notes in MaxLinear’s annual reports filed with the SEC, as well as the section of MaxLinear’s annual reports titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” which are incorporated by reference in this joint proxy statement/prospectus.

 

     Years Ended December 31,  
     2014     2013     2012     2011     2010  
     (in thousands, except per share data)  

Consolidated Statement of Operations Data:

          

Net revenue

   $ 133,112      $ 119,646      $ 97,728      $ 71,937      $ 68,701   

Cost of net revenue

     51,154        46,683        37,082        26,690        21,560   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

  81,958      72,963      60,646      45,247      47,141   

Operating expenses:

Research and development

  56,625      53,132      46,458      40,157      27,725   

Selling, general and administrative

  34,191      32,181      27,254      20,216      15,915   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

  90,816      85,313      73,712      60,373      43,640   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

  (8,858   (12,350   (13,066   (15,126   3,501   

Interest income

  236      222      282      292      326   

Interest expense

  (15   (4   (53   (69   (29

Other expense, net

  (108   (199   (74   (128   (55
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

  (8,745   (12,331   (12,911   (15,031   3,743   

Provision (benefit) for income taxes

  (1,704   402      341      6,993      (6,371
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  (7,041   (12,733   (13,252   (22,024   10,114   

Net income allocable to preferred stockholders

  —        —        —        —        (1,215
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to common stockholders:

$ (7,041 $ (12,733 $ (13,252 $ (22,024 $ 8,899   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share attributable to common stockholders:

Basic

$ (0.19 $ (0.37 $ (0.40 $ (0.68 $ 0.33   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

$ (0.19 $ (0.37 $ (0.40 $ (0.68 $ 0.30   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares used to compute net income (loss) per share:

Basic

  36,472      34,012      33,198      32,573      26,743   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

  36,472      34,012      33,198      32,573      29,478   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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     Years Ended December 31,  
     2014      2013      2012      2011      2010  
     (in thousands)  

Consolidated Balance Sheet Data:

              

Cash, cash equivalents and short- and long-term investments, available-for-sale

   $ 79,351       $ 86,354       $ 77,256       $ 85,736       $ 94,486   

Working capital

     67,668         56,558         68,450         76,585         95,444   

Total assets

     135,711         124,929         110,597         112,376         118,918   

Capital lease obligations, net of current portion

     —           —           —           2         18   

Total stockholders’ equity

     99,102         86,674         80,233         93,025         104,897   

 

 

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SELECTED HISTORICAL FINANCIAL DATA OF ENTROPIC

In the table below, Entropic provides you with summary historical financial data of Entropic. Entropic has prepared this information using the consolidated financial statements of Entropic for the five years ended December 31, 2014. The financial statements for the five fiscal years ended December 31, 2014 have been audited by Ernst & Young LLP, independent registered public accounting firm.

When you read this summary historical financial data, it is important that you read it together with the historical financial statements and related notes in Entropic’s annual reports filed with the SEC, as well as the section of Entropic’s annual reports titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” which are incorporated by reference in this joint proxy statement/prospectus.

 

     Years Ended December 31,  
     2014     2013     2012     2011     2010  
     (in thousands, except per share data)  

Consolidated Statement of Operations Data:

          

Net revenues

   $ 191,619      $ 259,376      $ 321,678      $ 240,628      $ 210,237   

Cost of net revenues(1)

     98,368        134,974        157,675        107,922        98,070   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

  93,251      124,402      164,003      132,706      112,167   

Operating expenses:

Research and development(1)

  117,234      114,536      98,353      60,065      48,717   

Sales and marketing(1)

  24,371      24,882      25,313      17,569      17,199   

General and administrative(1)

  23,258      22,415      25,474      14,568      13,134   

Amortization of intangibles

  1,244      2,312      2,575      —        —     

Restructuring charges

  12,375      1,694      897      —        —     

Impairment of assets

  12,687      —        —        —        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

  191,169      165,839      152,612      92,202      79,050   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

  (97,918   (41,437   11,391      40,504      33,117   

Loss related to equity method investment

  —        (1,115   (3,315   (791   —     

Impairment of investment

  —        (4,780   —        —        —     

Other income, net

  881      1,582      601      904      141   

Income tax provision (benefit)

  1,087      20,404      4,157      14,053      (31,446
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

  (98,124   (66,154   4,520      26,564      64,704   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to common stockholders

$ (98,124 $ (66,154 $ 4,520    $ 26,564    $ 64,704   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per share—basic

$ (1.09 $ (0.73 $ 0.05    $ 0.31    $ 0.86   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per share—diluted

$ (1.09 $ (0.73 $ 0.05    $ 0.30    $ 0.82   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares used to compute net (loss) income per share—basic

  89,783      90,494      88,164      86,258      75,040   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares used to compute net (loss) income per share—diluted

  89,783      90,494      90,364      89,018      78,916   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Includes stock-based compensation as follows:

 

 

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     Years Ended December 31,  
     2014      2013      2012      2011      2010  
     (in thousands)  

Cost of net revenues

   $ 429       $ 861       $ 828       $ 557       $ 384   

Research and development

     10,707         9,829         7,428         6,272         5,049   

Sales and marketing

     2,164         1,885         2,288         1,986         1,558   

General and administrative

     4,471         4,199         4,273         3,932         3,479   
     Years Ended December 31,  
     2014      2013      2012      2011      2010  
     (in thousands)  

Consolidated Balance Sheet Data:

              

Cash, cash equivalents, restricted cash and marketable securities

   $ 105,830       $ 157,754       $ 168,935       $ 216,526       $ 168,761   

Working capital

     115,772         128,721         155,653         161,987         196,489   

Total assets

     210,915         295,260         353,550         318,559         278,808   

Debt, software license and capital lease obligations—current and long-term

     —           —           —           —           137   

Total stockholders’ equity

     176,260         269,825         322,665         297,793         248,590   

 

 

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SELECTED UNAUDITED PRO FORMA

COMBINED FINANCIAL INFORMATION OF MAXLINEAR AND ENTROPIC

The following selected unaudited pro forma combined financial information has been prepared to illustrate the effect of the merger. The unaudited pro forma combined balance sheet information gives effect to the merger as if it occurred on December 31, 2014. The unaudited pro forma combined income statement information for the year ended December 31, 2014 gives effect to the merger as if it occurred on January 1, 2014.

The following selected unaudited pro forma combined financial information is for illustrative and informational purposes only. It does not purport to indicate the results that would actually have been obtained had the merger been completed on the assumed date or for the periods presented, or which may be realized in the future. Future results may vary significantly from the results reflected because of various factors, including those factors discussed in the section entitled “Risk Factors” beginning on page 34 of this joint proxy statement/prospectus.

The selected unaudited pro forma combined financial information has been derived from and should be read in conjunction with the section entitled “Unaudited Pro Forma Combined Financial Information” and the related notes included in this joint proxy statement/prospectus beginning on page 160.

 

     Year Ended
December 31,
 
     2014  
Select Unaudited Pro Forma Combined Statement of Operations Data    (in
thousands,
except per
share data)
 

Net revenue

   $ 324,731   

Gross Profit

     179,898   

Loss from operations

     (119,133

Net loss

     (117,522

Net loss per share:

  

Basic

   $ (2.08

Diluted

   $ (2.08

 

     As of
December 31,
 
     2014  
Select Unaudited Pro Forma Combined Balance Sheet Data    (in
thousands)
 

Cash, cash equivalents and short- and long-term investments, available-for-sale

   $ 76,096   

Working capital

     72,502   

Total assets

     351,286   

Total stockholders’ equity

     268,904   

 

 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA COMBINED PER SHARE DATA

The following table summarizes per share information for (i) MaxLinear and Entropic on an historical basis, (ii) MaxLinear on a pro forma combined basis giving effect to the merger, and (iii) Entropic on a pro forma equivalent basis based on the exchange ratio of 0.2200 of a share of MaxLinear Class A common stock per share of Entropic common stock. It has been assumed that the merger occurred on January 1, 2014, the first day of MaxLinear’s fiscal year ended December 31, 2014, in the case of net loss per share, and at December 31, 2014, in the case of book value per share data.

The following comparative historical and unaudited pro forma combined per share data is for illustrative and informational purposes only. It does not purport to indicate the results that would actually have been obtained had the merger been completed on the assumed date or for the periods presented, or which may be realized in the future. Future results may vary significantly from the results reflected because of various factors, including those factors discussed in the section entitled “Risk Factors” beginning on page 34 of this joint proxy statement/prospectus.

The following information should be read in conjunction with the consolidated financial statements and related notes of each of MaxLinear and Entropic that are incorporated by reference in this joint proxy statement/prospectus and with the information in the section entitled “Unaudited Pro Forma Combined Financial Statements” and the related notes included in this joint proxy statement/prospectus beginning on page 160.

 

     Year Ended
December 31,
2014
 

MaxLinear, Inc.

  

Net loss per share-basic:

  

Historical

   $ (0.19

Pro forma combined(1)

   $ (2.08

Net loss per share-diluted:

  

Historical

   $ (0.19

Pro forma combined(1)

   $ (2.08

Book value per common share(2)

  

Historical

   $ 2.72   

Pro forma combined

   $ 4.76   

Entropic Communications, Inc.

  

Net loss per share-basic:

  

Historical

   $ (1.09

Equivalent pro forma(1)(3)

   $ (0.46

Net loss per share-diluted:

  

Historical

   $ (1.09

Equivalent pro forma(1)(3)

   $ (0.46

Book value per common share(2)

  

Historical

   $ 1.96   

Equivalent pro forma

   $ 1.05   

 

(1) Amounts calculated based on pro forma financial statements giving effect to the merger.
(2) Amounts calculated by dividing shareholders’ equity by common shares outstanding.
(3) Amounts calculated by multiplying unaudited pro forma combined per share amounts by the exchange ratio of 0.2200 of a share of MaxLinear Class A common stock for each share of Entropic common stock.

 

 

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COMPARATIVE PER SHARE MARKET PRICE DATA

MaxLinear Class A common stock trades on the New York Stock Exchange under the symbol “MXL.” Entropic common stock trades on the Nasdaq Capital Market under the symbol “ENTR.”

The following table shows the high and low sales prices per share of MaxLinear Class A common stock and Entropic common stock on (1) February 2, 2015, the last full trading day preceding public announcement that MaxLinear and Entropic had entered into the merger agreement, and (2) March 27, 2015, the last trading day before the date of this joint proxy statement/prospectus.

The table also includes the equivalent high and low sales price per share of Entropic common stock on those dates. These equivalent high and low sales prices per share reflect the fluctuating value of MaxLinear Class A common stock that Entropic stockholders would receive in exchange for each share of Entropic common stock if the merger were completed on either of these dates calculated by multiplying each of the high and low sales prices for shares of MaxLinear Class A common stock by 0.2200 and adding $1.20.

 

     MaxLinear Class A
Common Stock
     Entropic Common
Stock
     Equivalent Price per
Share
 
         High              Low              High              Low              High              Low      

February 2, 2015

   $ 8.25       $ 7.89       $ 2.6899       $ 2.56       $ 3.015       $ 2.9358   

March 27, 2015

   $ 8.08       $ 7.88       $ 2.95       $ 2.90       $ 2.9776       $ 2.9336   

The above table shows only historical comparisons. These comparisons may not provide meaningful information to (i) MaxLinear stockholders in determining whether to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement or (ii) Entropic stockholders in determining whether to adopt the merger agreement. MaxLinear and Entropic stockholders are urged to obtain current market quotations for MaxLinear Class A common stock and Entropic common stock and to review carefully the other information contained in this joint proxy statement/prospectus or incorporated by reference into this joint proxy statement/prospectus in considering whether to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement, in the case of MaxLinear stockholders, and whether to adopt the merger agreement, in the case of Entropic stockholders. See the section entitled “Where You Can Find More Information” beginning on page 192 of this joint proxy statement/prospectus.

 

 

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RISK FACTORS

In addition to the other information included or incorporated by reference in, and found in the annexes attached to, this joint proxy statement/prospectus, including the matters addressed under the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 47 of this joint proxy statement/prospectus, MaxLinear stockholders should carefully consider the following risks before deciding whether to vote for approval of the issuance of the shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement and Entropic stockholders should carefully consider the following risks before deciding whether to vote for adoption of the merger agreement. In addition, stockholders of MaxLinear and Entropic should read and consider the risks associated with each of the businesses of MaxLinear and Entropic because these risks will relate to MaxLinear following completion of the merger. Certain of these risks can be found in MaxLinear’s annual report on Form 10-K for the fiscal year ended December 31, 2014, which is incorporated by reference into this joint proxy statement/prospectus, and in Entropic’s annual report on Form 10-K for the fiscal year ended December 31, 2014, which is incorporated by reference into this joint proxy statement/prospectus. You should also consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 192 of this joint proxy statement/prospectus.

Risks Relating to the Acquisition of Entropic and the Operations of MaxLinear Following Completion of the Acquisition

Because Entropic stockholders will be entitled to receive a fixed ratio of 0.2200 of a share of MaxLinear Class A common stock, together with $1.20 in cash, without interest, and cash payable in lieu of any fractional shares, without interest, for each share of Entropic common stock and the market price of MaxLinear Class A common stock will fluctuate, Entropic stockholders cannot be sure of the value of the MaxLinear Class A common stock to be issued in the merger.

At the effective time of the merger, each share of Entropic common stock will be converted into the right to receive 0.2200 of a share of MaxLinear Class A common stock, $1.20 in cash, without interest, and cash payable in lieu of any fractional shares, without interest, collectively referred to as the merger consideration. There will be no adjustment to the merger consideration (except for adjustments to the Class A common stock exchange ratio to reflect the effect of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification or other like change with respect to MaxLinear Class A common stock or Entropic common stock), and the parties do not have a right to terminate the merger agreement solely based upon changes in the market price of either MaxLinear Class A common stock or Entropic common stock. Accordingly, the dollar value of MaxLinear Class A common stock that Entropic stockholders will receive upon completion of the merger will depend upon the market value of MaxLinear Class A common stock at the time of completion of the merger, which may be different from, and lower or higher than, (i) $8.27, the closing price of MaxLinear Class A common stock on February 2, 2015 the last full trading day preceding the public announcement that MaxLinear and Entropic entered into the merger agreement, (ii) $7.97, the closing price of MaxLinear Class A common stock on March 27, 2015, the last trading day before the date of this joint proxy statement/prospectus, or (iii) the last full trading day prior to the date of the stockholder meetings. Moreover, because the date that the merger is completed will be later than the date of the MaxLinear special meeting and Entropic special meeting, MaxLinear and Entropic stockholders will not know at the time of the meetings the exact market value of the MaxLinear Class A common stock to be issued to Entropic stockholders upon completion of the merger.

The market values of MaxLinear Class A common stock and Entropic common stock have varied since MaxLinear and Entropic entered into the merger agreement and will continue to vary in the future due to changes in the business, operations or prospects of MaxLinear and Entropic, market assessments of the merger, regulatory considerations, market and economic considerations, and other factors both within and beyond the control of MaxLinear and Entropic.

 

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If the acquisition is completed, MaxLinear’s actual financial and operating results could differ materially from any expectations or guidance provided by MaxLinear concerning future results, including (without limitation) expectations or guidance with respect to the financial impact of any cost savings and other potential synergies.

MaxLinear currently expects to realize material cost savings and other synergies as a result of its proposed acquisition of Entropic, and as a result, MaxLinear currently believes that the acquisition will be accretive to its earnings per share, excluding upfront non-recurring charges, transaction related expenses, and the amortization of purchased intangible assets. The expectations and guidance MaxLinear has provided with respect to the potential financial impact of the acquisition are subject to numerous assumptions, however, including assumptions derived from its diligence efforts concerning the status of and prospects for Entropic’s business, which MaxLinear does not currently control, and assumptions relating to the near-term prospects for the semiconductor industry generally and the markets for Entropic’s products in particular. Additional assumptions MaxLinear has made relate to numerous matters, including (without limitation) the following:

 

    projections of Entropic’s future revenues;

 

    the anticipated financial performance of Entropic’s products and products currently in development;

 

    anticipated cost savings and other synergies associated with the acquisition, including potential revenue synergies;

 

    MaxLinear’s expected capital structure after the acquisition;

 

    the amount of goodwill and intangibles that will result from the acquisition;

 

    certain other purchase accounting adjustments that MaxLinear expects to record in its financial statements in connection with the acquisition;

 

    acquisition costs, including restructuring charges and transaction costs payable to MaxLinear’s financial, legal, and accounting advisors;

 

    MaxLinear’s ability to maintain, develop, and deepen relationships with customers of Entropic; and

 

    other financial and strategic risks of the Entropic acquisition, including the possible impact of reduced liquidity of MaxLinear resulting from deal-related cash outlays.

MaxLinear cannot provide any assurances with respect to the accuracy of its assumptions, including its assumptions with respect to future revenues or revenue growth rates, if any, of Entropic, and MaxLinear cannot provide assurances with respect to its ability to realize the cost savings that it currently anticipates. Risks and uncertainties that could cause MaxLinear’s actual results to differ materially from currently anticipated results include, but are not limited to, risks relating to MaxLinear’s ability to integrate Entropic successfully; currently unanticipated incremental costs that MaxLinear may incur in connection with integrating the two companies; risks relating to MaxLinear’s ability to realize incremental revenues from the acquisition in the amounts that MaxLinear currently anticipates; risks relating to the willingness of Entropic’s customers and other partners to continue to conduct business with MaxLinear; and numerous risks and uncertainties that affect the semiconductor industry generally and the markets for MaxLinear’s products and those of Entropic specifically. Any failure to integrate Entropic successfully and to realize the financial benefits MaxLinear currently anticipates from the acquisition would have a material adverse impact on MaxLinear’s future operating results and financial condition and could materially and adversely affect the trading price or trading volume of MaxLinear’s Class A common stock.

Failure to integrate the business and operations of MaxLinear successfully with those of Entropic in the expected time frame or otherwise may adversely affect MaxLinear’s operating results and financial condition if the acquisition is completed.

MaxLinear does not have a substantial history of acquiring other companies and has never pursued an acquisition of the size and complexity of Entropic. The success of the proposed acquisition of Entropic will

 

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depend, in substantial part, on MaxLinear’s ability to integrate Entropic’s business and operations successfully with those of MaxLinear and to realize fully the anticipated benefits and potential synergies from combining the companies, including, among others, currently expected cost savings from duplicative functions; potential operational efficiencies in their respective supply chains and in research and development investments; and potential revenue growth resulting from the addition of Entropic’s product portfolio. Historically, MaxLinear and Entropic have been independent companies, and will continue to operate as such until the completion of the acquisition. MaxLinear expects that the integration will be complex and time consuming and will require substantial management time and attention, which may divert attention and resources from other important areas, including MaxLinear’s existing businesses. MaxLinear may face significant challenges in consolidating its operations with Entropic, integrating the two companies’ technologies, and addressing the different corporate cultures of the two companies. Additional unanticipated costs may be incurred in the course of integrating the respective businesses of MaxLinear and Entropic. If the companies are not successfully integrated, the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than expected. In such a case, MaxLinear would expect its operating results and financial condition to be materially and adversely affected, which could also have a material and adverse effect on the trading price or trading volume of MaxLinear’s Class A common stock.

Each of MaxLinear’s and Entropic’s business relationships, including customer relationships, may be subject to disruption due to uncertainty associated with the acquisition.

In response to the announcement of the acquisition, customers, vendors, licensors, and other third parties with whom MaxLinear or Entropic do business or otherwise have relationships may experience uncertainty associated with the acquisition, and this uncertainty could materially affect their decisions with respect to existing or future business relationships with MaxLinear or Entropic while the acquisition is pending or with MaxLinear after the acquisition is completed. Moreover, with respect to Entropic’s prior acquisition of certain television and set-top box assets from Trident Microsystems, Inc. (referred to as Trident), MaxLinear was unable to conduct substantial diligence with respect to certain licenses and intellectual property rights because Entropic acquired these assets through Trident’s bankruptcy proceedings. As a result, MaxLinear is in many instances unable to evaluate the impact of the acquisition on certain assumed contract rights and obligations, including intellectual property rights.

These business relationships may be subject to disruption as customers and others may elect to delay or defer purchase or design-win decisions or switch to other suppliers due to the uncertainty about the direction of MaxLinear’s offerings, any perceived unwillingness on MaxLinear’s part to support existing Entropic products after the acquisition is completed, or any general perceptions by customers or other third parties that impute operational or business challenges to MaxLinear arising from the acquisition. In addition, customers or other third parties may attempt to negotiate changes in existing business relationships, which may result in additional obligations imposed on MaxLinear and Entropic. These disruptions could have a material adverse effect on MaxLinear’s and Entropic’s business, operating results, and financial condition while the acquisition is pending or after it is completed. The adverse effect of any such disruptions could be exacerbated by a delay in the completion of the acquisition for any reason, including delays associated with obtaining regulatory approvals, or termination of the merger agreement. Any loss of customers, customer products, design win opportunities, or other important strategic relationships could have a material adverse effect on MaxLinear’s and Entropic’s business, operating results, and financial condition and could have a material and adverse effect on the trading price or trading volume of MaxLinear’s Class A common stock and Entropic’s common stock.

MaxLinear and Entropic may have difficulty motivating and retaining executives and other key employees in light of the acquisition.

Uncertainty about the effect of the acquisition on each of MaxLinear’s and Entropic’s employees may have an adverse effect on MaxLinear or Entropic while the acquisition is pending or on MaxLinear after the

 

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acquisition is completed. This uncertainty may impair MaxLinear’s or Entropic’s ability to retain and motivate key personnel in the months leading up to the completion of the acquisition and MaxLinear’s ability to retain and motivate them following the acquisition. Employee retention may be particularly challenging as MaxLinear’s and Entropic’s employees may experience frustrations during the integration process and uncertainty about their future roles with MaxLinear following the completion of the acquisition. For the acquisition to be successful, MaxLinear and Entropic must continue to retain and motivate executives and other key employees during the period before the acquisition is completed. Furthermore, after the acquisition is completed, MaxLinear must be successful at retaining and motivating key employees in order for the benefits of the transaction to be fully realized. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to become employees of MaxLinear after the acquisition is completed, MaxLinear may incur significant costs in identifying, hiring, and retaining replacements for departing employees, which could substantially reduce or delay MaxLinear’s ability to realize the anticipated benefits of the acquisition and could have a material adverse effect on MaxLinear’s and Entropic’s business, operating results, and financial condition.

The merger agreement contains provisions that may preclude MaxLinear and Entropic, while the transaction is pending, from pursuing acquisitions that they might otherwise pursue or that could discourage or deter bids for their respective companies, and could require one of them to pay a termination fee of $11.65 million to the other party if the merger is not completed under certain circumstances.

Under the merger agreement, subject to certain exceptions, each of MaxLinear and Entropic is restricted from pursuing or entering into agreements with respect to transactions involving acquisitions of its assets or business. In addition, unless and until the merger agreement is terminated, subject to specified exceptions, each of MaxLinear and Entropic is restricted from soliciting, initiating, knowingly encouraging, or knowingly facilitating from or with any person proposals that could reasonably be expected to lead to an “acquisition transaction” (as defined in the merger agreement) and including transactions that would result in a change-of-control in or acquisition of such company. Each of the MaxLinear board and the Entropic board is permitted under certain circumstances to change its recommendation to its stockholders prior to its anticipated special meeting of stockholders if it receives a “superior proposal” or if an “intervening event” has occurred (in each case, as such terms are defined in the merger agreement). Nevertheless, in such events, the company receiving a superior proposal or experiencing an intervening event is required to negotiate with the other party regarding potential amendments to the merger agreement and may only enter into an agreement with respect to a superior proposal if specified conditions have been satisfied and such party has paid the other party a termination fee of $11.65 million. In addition, each of MaxLinear and Entropic could be required to pay to the other party a termination fee if the other party terminates the merger agreement due to a “triggering event,” which is defined in the merger agreement and includes a change of recommendation by such party’s board to its stockholders or such party’s breach of the non-solicitation provisions of the merger agreement. These restrictive covenants contained in the merger agreement could have the effect while the acquisition is pending of preventing either party from pursuing acquisitions of complementary products or businesses that their respective management believes would be in the best interests of their company and their stockholders. In addition, these restrictions could discourage a third party that may have an interest in acquiring MaxLinear or Entropic from considering or proposing such an acquisition. If such a proposal were forthcoming, MaxLinear or Entropic, as applicable, may not be able to enter into an agreement with respect to such an alternative transaction without incurring potentially significant liability to the other party.

MaxLinear and Entropic will be subject to contractual restrictions while the merger is pending.

MaxLinear and Entropic have operated and, until the completion of the merger, will continue to operate, independently. The merger agreement restricts MaxLinear and Entropic from making certain acquisitions and taking other specified actions until the merger occurs without the consent of the other party. These restrictions may prevent MaxLinear and Entropic from pursuing attractive business opportunities that may arise prior to the completion of the merger. Please see the section entitled “The Merger Agreement—Conduct of Business Before Completion of the Merger” on page 141 for a description of the restrictive covenants.

 

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MaxLinear and Entropic may waive one or more of the conditions of the merger without resoliciting stockholder approval for the merger.

Each of the conditions to MaxLinear’s and Entropic’s obligations to complete the merger may be waived, in whole or in part, if permitted by applicable legal requirements, by agreement of MaxLinear and Entropic, if the condition is a condition to both MaxLinear’s and Entropic’s obligation to complete the merger, or by the party for which such condition is a condition of its obligation to complete the merger. The boards of directors of MaxLinear and Entropic may evaluate the materiality of any such waiver to determine whether amendment of this joint proxy statement/prospectus and resolicitation of proxies are necessary. MaxLinear and Entropic, however, generally do not expect any such waiver to be significant enough to require resolicitation of stockholders. In the event that any such waiver is determined not to be significant enough to require resolicitation of stockholders, the companies will have the discretion to complete the merger without seeking further stockholder approval.

If the merger is not consummated under certain circumstances, each of MaxLinear and Entropic may be obligated to pay the other party a reverse termination fee of $11.65 million, which could adversely impact MaxLinear’s or Entropic’s respective financial position.

Each of MaxLinear and Entropic may terminate the merger agreement under certain circumstances as set forth in the merger agreement, including if such party terminates the merger agreement to enter into an agreement with respect to a “superior proposal” or if such party terminates the merger agreement due to a “triggering event” (as defined in the merger agreement) of such party (including a change of recommendation by such party’s board of directors or a breach by such party of its nonsolicitation obligations or its board recommendation provisions in any material respect). Under such circumstances, each of MaxLinear or Entropic, as the case may be, may be obligated to pay a reverse termination fee of $11.65 million to the other party.

If the proposed acquisition is not completed, MaxLinear and Entropic will have incurred substantial costs that may adversely affect their operating results and financial condition as well as the market price of MaxLinear’s Class A common stock and Entropic’s common stock.

If the acquisition is not completed, the price of MaxLinear’s Class A common stock and Entropic’s common stock may decline to the extent that the current market prices of such Class A common stock and common stock reflect a market assumption that the acquisition will be completed. In addition, both parties have incurred and will incur substantial costs in connection with the proposed acquisition. These costs are primarily associated with the fees of their respective financial advisors, accountants, and legal counsel and, with limited exceptions relating to a portion of their financial advisor fees, will be payable regardless of whether the acquisition is completed. In addition, both parties have diverted significant management resources in an effort to complete the acquisition and are each subject to restrictions contained in the merger agreement on the conduct of their business during the pendency of the acquisition. If the acquisition is not completed, the parties will have received little or no benefit in respect of such costs incurred. If the acquisition is not completed under certain circumstances specified in the merger agreement, a party may be required to pay a termination fee to the other party of $11.65 million or to reimburse the other party for its merger-related out-of-pocket expenses up to a cap of $2.5 million. Furthermore, if the acquisition is not completed, both parties may experience negative reactions from the financial markets and our suppliers, customers, customer prospects, and employees. Any of these factors could have an adverse effect on MaxLinear’s and Entropic’s business, operating results, and financial condition or on the trading price of MaxLinear’s Class A common stock and Entropic’s common stock.

 

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The ability of MaxLinear and Entropic to complete the acquisition is subject to various closing conditions, including the approval of MaxLinear and Entropic stockholders and certain required governmental approvals and authorizations, which may not be satisfied. Failure to complete the acquisition could have a material adverse effect on the companies’ business, financial conditions, results of operations, and the trading price of MaxLinear Class A common stock or Entropic common stock.

To complete the acquisition, MaxLinear stockholders must approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement, and Entropic stockholders must adopt the merger agreement. In addition, completion of the acquisition is conditioned upon the receipt of certain governmental approvals and authorizations, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (for which early termination was received on February 26, 2015), the authorization of the listing on the NYSE of the shares of MaxLinear Class A common stock to be issued in the merger, and the declaration of the effectiveness of the registration statement on Form S-4 to which this joint proxy statement/prospectus relates by the SEC. MaxLinear and Entropic can provide no assurance that the various closing conditions will be satisfied and that the necessary governmental approvals or authorizations will be obtained.

Notwithstanding early termination of the waiting period under the HSR Act, the Antitrust Division of the United States Department of Justice, the Federal Trade Commission, or other governmental authorities could challenge or seek to block the acquisition under applicable antitrust laws, as such governmental authority deems necessary or desirable in the public interest. Other competition agencies with jurisdiction over the acquisition could also initiate action to challenge or block the acquisition. In addition, in some jurisdictions, a competitor, customer or other third party could initiate a private action under the antitrust laws challenging or seeking to enjoin the acquisition, before or after it is completed. MaxLinear and Entropic cannot be sure that a challenge to the acquisition will not be made or that, if a challenge is made, MaxLinear and/or Entropic will prevail.

If MaxLinear and Entropic are unable to complete the acquisition, MaxLinear and Entropic would be subject to a number of risks, including the following:

 

    MaxLinear and Entropic would not realize the anticipated benefits of the acquisition, including, among other things, increased operating efficiencies;

 

    the attention of management of MaxLinear and Entropic may have been diverted to the acquisition rather than to each company’s own operations and the pursuit of other opportunities that could have been beneficial to that company;

 

    the potential loss of key personnel during the pendency of the acquisition as employees and other service providers may experience uncertainty about their future roles with MaxLinear following the completion of the acquisition; and

 

    the trading price of MaxLinear Class A common stock and/or Entropic common stock may decline to the extent that the current market prices reflect a market assumption that the acquisition will be completed.

The occurrence of any of these events individually or in combination could have a material adverse effect on the companies’ business, financial conditions, results of operations, and the trading price of MaxLinear Class A common stock or Entropic common stock.

In order to complete the acquisition and distribute the cash consideration payable to Entropic’s stockholders, MaxLinear will be required to use substantially all of Entropic’s available cash resources and a sizeable portion of MaxLinear’s cash resources. As a result, MaxLinear’s available liquidity after the acquisition will be reduced at the same time that the scope of MaxLinear’s operations and cash requirements have increased, and MaxLinear may be required to seek additional financing.

Under the terms of the merger agreement and in order to implement the distribution of the cash portion of the merger consideration to Entropic’s stockholders, Entropic is required to deliver to the exchange agent specified for the acquisition an amount of cash designated by MaxLinear, which cannot exceed Entropic’s

 

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aggregate cash and cash equivalents less $10.0 million. MaxLinear will be required to fund the balance of the cash portion of the merger consideration from MaxLinear’s own cash and cash equivalents. Consequently, substantially all of Entropic’s available cash will be used in connection with the acquisition, and MaxLinear’s overall liquidity after completion of the acquisition will be materially reduced relative to MaxLinear’s current liquidity even though MaxLinear will have incurred substantial expenses and expects to incur additional restructuring costs as MaxLinear integrates Entropic’s business and operations. To the extent Entropic’s cash and cash equivalents at closing are less than the amount that MaxLinear currently anticipates, MaxLinear would be required to use a larger portion of MaxLinear’s available cash. As a result of these factors, MaxLinear’s board of directors and management may determine to seek financing to enhance MaxLinear’s liquidity, which could involve the issuance of debt or equity securities. MaxLinear cannot provide any assurances that additional financing will be available when and as needed or on terms that MaxLinear believes to be commercially reasonable. To the extent MaxLinear issues debt securities, such indebtedness would have rights that are senior to holders of equity securities and could contain covenants that restrict MaxLinear’s operations. Any equity financing would be dilutive to MaxLinear’s current stockholders. If MaxLinear determines that it requires funding as a result of the acquisition but cannot obtain such funding on terms MaxLinear considers to be reasonable, MaxLinear may seek other methods to reduce MaxLinear’s use of cash, including reductions in MaxLinear’s research and development spending, which would be expected to have an adverse long-term effect on MaxLinear’s business, operating results, and financial condition.

A number of purported stockholder lawsuits have been filed against MaxLinear, Entropic, Entropic’s directors, and MaxLinear’s merger subsidiaries, Excalibur Acquisition Corporation and Excalibur Subsidiary, LLC, challenging the acquisition, and an unfavorable judgment or ruling in these lawsuits could prevent or delay the consummation of the acquisition, result in substantial costs, or have an adverse effect on each of MaxLinear’s and Entropic’s business, financial condition and operating results.

Beginning on February 9, 2015, a number of purported stockholder class action complaints were filed on behalf of a putative class of Entropic stockholders in the Court of Chancery in the State of Delaware and in the Superior Court of the State of California County of San Diego. The class action complaints name Entropic, the members of Entropic’s board, MaxLinear, and MaxLinear’s merger subsidiaries, Excalibur Acquisition Corporation and Excalibur Subsidiary, LLC, as defendants. The class action complaints generally allege, among other things, that, in connection with MaxLinear’s proposed acquisition of Entropic, the individual defendants breached their fiduciary duties to Entropic stockholders by, among other things, purportedly failing to take steps to maximize the value of Entropic to its stockholders and agreeing to allegedly preclusive deal protection devices in the merger agreement. The complaints further allege that Entropic, MaxLinear, and/or MaxLinear’s merger subsidiaries aided and abetted the individual defendants in the alleged breaches of their fiduciary duties. The complaints seek, among other things: an order enjoining the defendants from consummating the proposed transaction; an order declaring the merger agreement unlawful and unenforceable; in the event that the proposed transaction is consummated, an order rescinding it and setting it aside or awarding rescissory damages to the class; imposition of a constructive trust; damages; and/or attorneys’ fees and costs.

Beginning on February 25, 2015, two stockholder complaints were filed in the United States District Court for the Southern District of California on behalf of a putative class of Entropic stockholders and derivatively on behalf of Entropic. The complaints name MaxLinear, MaxLinear’s merger subsidiaries, and the members of Entropic’s board of directors as defendants and name Entropic as a nominal party. The complaints generally allege that, in connection with the proposed acquisition of Entropic by MaxLinear, the individual defendants breached their fiduciary duties to Entropic stockholders by, among other things, purportedly failing to take steps to maximize the value of Entropic to its stockholders and agreeing to allegedly preclusive deal protection devices in the merger agreement. The complaints further allege that MaxLinear and the merger subsidiaries aided and abetted the individual defendants in the alleged breaches of their fiduciary duties. The complaints seek, among other things, an order enjoining the defendants from consummating the proposed transaction, an order rescinding, to the extent already implemented, the merger agreement or any of its terms, and awarding plaintiffs costs, including attorneys’ and experts’ fees.

 

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Additional lawsuits may be filed.

MaxLinear’s and Entropic’s management believe that the allegations in the Delaware and California actions are without merit and intend to vigorously contest the actions. However, litigation is inherently uncertain, and there can be no assurances that the defense of these stockholder lawsuits will be successful. In addition, MaxLinear and Entropic have obligations, under certain circumstances, to hold harmless and indemnify each of the defendant directors against judgments, fines, settlements and expenses related to claims against such directors and otherwise to the fullest extent permitted under Delaware law and MaxLinear’s and Entropic’s respective bylaws and certificates of incorporation. Such obligations may apply to these lawsuits. An unfavorable outcome in these lawsuits could prevent or delay the consummation of the acquisition, result in substantial costs to MaxLinear and Entropic, or have an adverse effect on MaxLinear’s business, financial condition and operating results.

If the acquisition of Entropic is completed, the issuance of shares of MaxLinear Class A common stock to Entropic stockholders will substantially reduce the percentage interests of MaxLinear’s stockholders.

At the completion of the proposed acquisition of Entropic, MaxLinear expects to issue approximately 20.6 million shares of MaxLinear Class A common stock to former Entropic stockholders entitled to receive consideration pursuant to the merger agreement. If the acquisition is completed, it is expected that existing MaxLinear stockholders will own approximately 65% and that current Entropic stockholders will own approximately 35% of the outstanding capital stock post-completion.

MaxLinear stockholders and Entropic stockholders currently have the right to vote for their respective boards of directors and on other matters affecting the applicable company. When the merger occurs, each Entropic stockholder that receives shares of MaxLinear Class A common stock will become a stockholder of MaxLinear with a percentage ownership that is significantly smaller than the stockholder’s percentage ownership in Entropic. Correspondingly, each MaxLinear stockholder will remain a stockholder of MaxLinear with a percentage ownership that is significantly smaller than the stockholder’s percentage ownership of MaxLinear prior to the merger. As a result of these reduced ownership percentages, MaxLinear stockholders will have less influence on the management and policies of the combined company than they now have with respect to MaxLinear, the former Entropic stockholders will have less influence on the management and policies of MaxLinear than they now have with respect to Entropic. In addition, the issuance of shares of MaxLinear’s Class A common stock to Entropic stockholders in the acquisition and the assumption by MaxLinear of Entropic stock options, restricted stock units, and certain performance stock units will cause a significant reduction in the relative percentage interests of MaxLinear’s current stockholders in earnings, voting, liquidation value and book and market value.

MaxLinear expects to incur substantial expenses related to the integration of MaxLinear and Entropic.

MaxLinear expects to incur substantial expenses in connection with integrating the operations, technologies, and business systems of MaxLinear and Entropic. MaxLinear expects business systems integration between the two companies to require substantial management attention, including integration of information management, purchasing, accounting and finance, sales, payroll and benefits systems and regulatory compliance functions. Numerous factors beyond MaxLinear’s control could affect the total cost or the timing of expected integration expenses. Moreover, many of the expenses that will be incurred are by their nature difficult to estimate accurately at the present time. These expenses could, particularly in the near term, reduce the savings that MaxLinear expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the businesses. These integration expenses may result in MaxLinear’s taking significant charges against earnings following the completion of the acquisition.

Certain directors and executive officers of Entropic have interests in the merger that may be different from, or in addition to, the interests of Entropic stockholders.

Executive officers of Entropic negotiated the terms of the merger agreement under the direction of the Entropic board. The board of Entropic unanimously approved the merger agreement, the merger, and the other

 

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transactions contemplated thereby and unanimously recommends that Entropic stockholders vote in favor of the adoption of the merger agreement. These directors and executive officers may have interests in the merger that are different from, or in addition to, or may be deemed to conflict with, interests of Entropic stockholders. These interests include the continued position of one of the directors of Entropic as a director of MaxLinear following completion of the merger, the potential employment or consultancy of certain executive officers of Entropic by MaxLinear following the completion of the merger, and the indemnification of former Entropic directors and officers by MaxLinear following completion of the merger. These interests also include the treatment in the merger of employment agreements, change of control and severance agreements, restricted stock units, stock options and other rights held by these directors and executive officers, including the right to vesting acceleration upon a change of control under various equity awards and agreements. Entropic stockholders should be aware of these interests when they consider the Entropic board’s recommendation that they vote in favor of the proposal to adopt the merger agreement. For a discussion of the interests of directors and executive officers in the merger, see “The Merger—Interests of the Directors and Executive Officers of Entropic in the Merger” beginning on page 118 of this joint proxy statement/prospectus.

The unaudited pro forma combined financial information included in this joint proxy statement/prospectus and the financial projections provided to each party’s board of directors and financial advisor in connection with the acquisition may not be indicative of what MaxLinear’s actual financial position or results of operations would have been.

The unaudited pro forma combined financial information included in this joint proxy statement/prospectus is presented solely for illustrative purposes and is not necessarily indicative of what MaxLinear’s actual financial position or results of operations would have been had the merger been completed on the dates indicated. This unaudited pro forma combined financial information reflects adjustments that were developed using preliminary estimates based on available information and various assumptions, and will be revised as additional information becomes available. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this joint proxy statement/prospectus. In addition, financial projections were provided to each party’s board of directors and financial advisor in connection with the merger. These projections are based on assumptions and information available at the time they were made as well as uncertainties and limitations discussed in the sections entitled “The Merger—Certain Unaudited Prospective Financial Information Reviewed by Entropic’s Board of Directors and Entropic’s Financial Advisor” and “The Merger—Certain Unaudited Prospective Financial Information Reviewed by MaxLinear’s Board of Directors and MaxLinear’s Financial Advisor” below. Actual performance may differ materially from these projections.

MaxLinear will record goodwill that could become impaired and adversely affect its future operating results.

The acquisition will be accounted for as an acquisition by MaxLinear in accordance with accounting principles generally accepted in the United States. Under the acquisition method of accounting, the assets and liabilities of Entropic will be recorded, as of completion, at their respective fair values and added to MaxLinear’s assets and liabilities. MaxLinear’s reported financial condition and results of operations after completion of the acquisition will reflect Entropic’s balances and results but will not be restated retroactively to reflect the historical financial position or results of operations of Entropic for periods prior to the acquisition. As a result, comparisons of future results against prior period results will be more difficult for investors.

Under the acquisition method of accounting, the total purchase price will be allocated to Entropic’s tangible assets and liabilities and identifiable intangible assets based on their fair values as of the date of completion of the acquisition. The excess of the purchase price over those fair values will be recorded as goodwill. MaxLinear expects that the acquisition will result in the creation of goodwill based upon the application of the acquisition method of accounting. To the extent the value of goodwill or other intangibles become impaired, MaxLinear may be required

 

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to incur material charges relating to such impairment. Any such impairment charge could have a material impact on MaxLinear’s operating results in future periods, and the announcement of a material impairment could have an adverse effect on the trading price and trading volume of MaxLinear’s Class A common stock.

The market price of MaxLinear’s Class A common stock after the merger may be affected by factors different from those affecting the market price of MaxLinear Class A common stock or of Entropic common stock before the merger.

When the merger is complete, Entropic stockholders will become MaxLinear shareholders. The results of operations of MaxLinear, as well as the trading price of MaxLinear Class A common stock, after the merger may be affected by factors different from those currently affecting MaxLinear’s or Entropic’s results of operations and the trading price of MaxLinear Class A common stock or Entropic common stock. For a discussion of the businesses of MaxLinear and Entropic and of certain factors to consider in connection with those businesses, see the documents incorporated by reference into this joint proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page 192.

Other Risks Related to MaxLinear and Entropic

MaxLinear’s and Entropic’s businesses are and will be subject to the risks described above. In addition, MaxLinear and Entropic are, and will continue to be, subject to the risks described in MaxLinear’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and Entropic’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, both of which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” for the location of information incorporated by reference in this joint proxy statement/prospectus.

Risks Related to Ownership of MaxLinear Class A Common Stock

The market value of MaxLinear Class A common stock could decline if large amounts of its Class A common stock is sold following the acquisition.

Following the acquisition, stockholders of MaxLinear and former stockholders of Entropic will own interests in a company operating an expanded business with more assets and a different mix of liabilities. Current stockholders of MaxLinear and those of Entropic who will receive MaxLinear’s Class A common stock in connection with the acquisition may not wish to continue to invest in MaxLinear, or may wish to reduce their investment in MaxLinear, in order to comply with institutional investing guidelines, to increase diversification, to track any rebalancing of stock indices in which MaxLinear Class A common stock and Entropic common stock is or was included or for any other reason. If, following the acquisition, large amounts of MaxLinear Class A common stock are sold, the price of its Class A common stock could decline.

The shares of MaxLinear Class A common stock to be received by Entropic stockholders as a result of the acquisition will have different rights from shares of Entropic common stock.

Following completion of the acquisition, Entropic stockholders will no longer be stockholders of Entropic but will instead be stockholders of MaxLinear. There are important differences between the rights of Entropic stockholders and the rights of MaxLinear stockholders. See the following risk factor and “Comparison of Rights of Stockholders of MaxLinear and Entropic” beginning on page 177 of this joint proxy statement/prospectus for a discussion of the different rights associated with MaxLinear Class A common stock and Entropic common stock.

 

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The dual class structure of MaxLinear common stock as contained in its charter documents will have the effect of allowing MaxLinear’s founders, executive officers, employees and directors and their affiliates to limit the ability of MaxLinear Class A common stockholders to influence corporate matters that you may consider unfavorable.

MaxLinear’s founders, executive officers, directors and their affiliates and employees hold shares of MaxLinear Class B common stock, which is not publicly traded. Until March 29, 2017, the dual class structure of MaxLinear common stock will have the following effects with respect to the holders of MaxLinear’s Class A common stock:

 

    allows the holders of MaxLinear Class B common stock to have the sole right to elect two management directors to the board of directors;

 

    with respect to change of control matters, allows the holders of MaxLinear Class B common stock to have ten votes per share compared to the holders of MaxLinear Class A common stock who will have one vote per share on these matters; and

 

    with respect to the adoption of or amendments to MaxLinear equity incentive plans, allows the holders of MaxLinear Class B common stock to have ten votes per share compared to the holders of MaxLinear Class A common stock who will have one vote per share on these matters, subject to certain limitations.

Thus, MaxLinear’s dual class structure will limit the ability of MaxLinear Class A common stockholders to influence corporate matters, including with respect to transactions involving a change of control, and, as a result, MaxLinear may take actions that its stockholders do not view as beneficial, which may adversely affect the market price of MaxLinear Class A common stock. In addition to the additional voting rights granted to holders of MaxLinear Class B common stock, which is held principally by certain of MaxLinear’s executive officers and founders, MaxLinear has entered into change of control agreements with its executive officers, which could have an adverse effect on a third party’s willingness to consider acquiring MaxLinear, either because it may be more difficult to retain key employees with change of control benefits or because of the incremental cost associated with these benefits.

The concentration of MaxLinear capital stock ownership with its founders will limit the ability of MaxLinear Class A common stockholders to influence corporate matters and their interests may differ from other stockholders.

As of December 31, 2014, MaxLinear’s founders, including its Chairman, President and Chief Executive Officer, Dr. Seendripu, together control approximately 17% of MaxLinear’s outstanding capital stock, representing approximately 61% of the voting power of MaxLinear’s outstanding capital stock with respect to change of control matters and the adoption of or amendment to MaxLinear’s equity incentive plans. Dr. Seendripu and the other founders therefore have significant influence over MaxLinear management and affairs and over all matters requiring stockholder approval, including the election of two Class B directors and significant corporate transactions, such as a merger or other sale of MaxLinear or its assets, for the foreseeable future.

Anti-takeover provisions in MaxLinear’s charter documents and under Delaware law could make an acquisition of MaxLinear more difficult, limit attempts by MaxLinear stockholders to replace or remove its current management and limit the market price of its Class A common stock.

Provisions in MaxLinear’s certificate of incorporation and bylaws, as amended and restated, may have the effect of delaying or preventing a change of control or changes in its management. These provisions provide for the following:

 

    authorize the MaxLinear Board to issue, without further action by the stockholders, up to 25,000,000 shares of undesignated preferred stock;

 

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    require that any action to be taken by MaxLinear stockholders be effected at a duly called annual or special meeting and not by written consent;

 

    specify that special meetings of MaxLinear stockholders can be called only by MaxLinear’s board of directors, chairman of the board of directors, president, or by unanimous written consent of its directors appointed by the holders of Class B common stock;

 

    establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of MaxLinear stockholders, including proposed nominations of persons for election to MaxLinear’s board of directors;

 

    establish that MaxLinear’s board of directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered terms and with one Class B director being elected to each of Class II and Class III;

 

    provide for a dual class common stock structure, which provides MaxLinear’s founders, current investors, executives and employees with significant influence over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of MaxLinear or its assets;

 

    provide that MaxLinear’s directors may be removed only for cause;

 

    provide that vacancies on MaxLinear’s board of directors may be filled only by a majority of directors then in office, even though less than a quorum, other than any vacancy in the two directorships reserved for the designees of the holders of Class B common stock, which may be filled only by the affirmative vote of the holders of a majority of the outstanding Class B common stock or by the remaining director elected by the Class B common stock (with the consent of founders holding a majority in interest of the Class B common stock over which the founders then exercise voting control);

 

    specify that no stockholder is permitted to cumulate votes at any election of directors; and

 

    require the affirmative vote of at least 66 2/3% of the voting power of the outstanding shares of MaxLinear’s capital stock to amend specified provisions of MaxLinear’s certificate of incorporation and bylaws.

These provisions may frustrate or prevent any attempts by MaxLinear stockholders to replace or remove its current management by making it more difficult for stockholders to replace members of MaxLinear’s board of directors, which is responsible for appointing the members of MaxLinear’s management. In addition, because MaxLinear is incorporated in Delaware, it is governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.

Future sales of MaxLinear Class A common stock in the public market could cause its share price to decline.

Sales of a substantial number of shares of MaxLinear Class A common stock in the public market, or the perception that these sales might occur, could depress the market price of its Class A common stock and could impair its ability to raise capital through the sale of additional equity securities. As of December 31, 2014, MaxLinear had 30.9 million shares of Class A common stock and 7.0 million shares of Class B common stock outstanding.

All shares of Class A common stock are freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, except for any shares held by MaxLinear’s affiliates as defined in Rule 144 under the Securities Act.

 

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MaxLinear has filed registration statements on Form S-8 under the Securities Act to register 16.9 million shares of its Class A common stock for issuance under its 2010 Equity Incentive Plan, as amended, or the 2010 Plan, and 2010 Employee Stock Purchase Plan, as amended. These shares may be freely sold in the public market upon issuance and once vested or settled, subject to other restrictions provided under the terms of the applicable plan and/or the option or restricted stock award agreements entered into with the option or award holder.

MaxLinear’s Executive Incentive Bonus Plan permits the settlement of awards under the plan in the form of shares of its Class A common stock. For the 2013 and 2012 performance period, actual awards under the Executive Incentive Bonus Plan were settled in Class A common stock issued under MaxLinear’s 2010 Equity Incentive Plan, as amended, with the number of shares issuable to plan participants determined based on the closing sales price of MaxLinear’s Class A common stock as determined in trading on the New York Stock Exchange on May 9, 2014 and May 3, 2013, respectively. Additionally, MaxLinear settled all bonus awards for all other employees for the 2013 and 2012 performance period in shares of its Class A common stock. MaxLinear issued 0.6 million shares of its Class A common stock for the 2013 performance period upon settlement of the bonus awards on May 9, 2014. MaxLinear issued 0.8 million shares of its Class A common stock for the 2012 performance period upon settlement of the bonus awards on May 3, 2013. MaxLinear intends to settle all bonus awards for employees for the 2014 performance period in shares of its Class A common stock. MaxLinear cannot currently predict when the bonus awards will be settled, but it currently anticipates that approximately 0.4 million shares of its Class A common stock will be issued for the 2014 performance period. These shares may be freely sold in the public market immediately following the issuance of such shares and the issuance of such shares may have an adverse effect on MaxLinear’s share price once they are issued.

MaxLinear does not intend to pay dividends for the foreseeable future.

MaxLinear has never declared or paid any cash dividends on its common stock and does not intend to pay any cash dividends in the foreseeable future. MaxLinear anticipates that it will retain all of its future earnings for use in the development of its business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of MaxLinear’s board of directors. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including with respect to the anticipated timing, completion and effects of the proposed merger between MaxLinear and Entropic. These statements are based on current expectations and beliefs of the management of MaxLinear and Entropic, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements include statements regarding the expected timetable for completing the merger, benefits and synergies of the merger, future financial performance, future opportunities for MaxLinear following completion of the merger, and other statements regarding the proposed transaction. Forward-looking statements may contain words such as “will be,” “will,” “expect,” “anticipate,” “continue,” “project,” “believe,” “plan,” “could,” “estimate,” “forecast,” “guidance,” “intend,” “may,” “plan,” “possible,” “potential,” “predict,” “pursue,” “should,” “target” or similar expressions, and include the assumptions that underlie such statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements:

 

    the timing to complete the merger;

 

    failure to obtain the required votes of MaxLinear’s or Entropic’s stockholders and risks that the other conditions to closing the merger may not be satisfied or the merger may not otherwise occur;

 

    the expected financial condition, results of operations, earnings outlook and prospects of MaxLinear, Entropic and MaxLinear following completion of the merger;

 

    the timing, outcome and results of integrating the operations of Entropic with those of MaxLinear and the outcome of any anticipated benefits or potential synergies from combining the companies;

 

    the ability of MaxLinear and Entropic to maintain relationships with their respective employees, suppliers or customers as a result of the uncertainty surrounding the merger;

 

    diversion of management time and other resources to transaction-related matters;

 

    changes in MaxLinear’s or Entropic’s businesses, future cash requirements, capital requirements, results of operations, revenues, financial condition, and/or cash flows;

 

    changes in merger-related transaction costs, the amount of fees paid to financial advisors and the potential payments to Entropic’s named executive officers in connection with the merger; and

 

    outcome of any legal proceedings that have been or may be instituted against MaxLinear, Entropic, or others following announcement of the transactions contemplated by the merger agreement.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the risk factors set forth in this joint proxy statement/prospectus beginning on page 34 of this joint proxy statement/prospectus and the risk factors included in MaxLinear’s and Entropic’s annual reports on Form 10-K for the year ending December 31, 2014 and other documents of MaxLinear and Entropic on file with the Securities and Exchange Commission and incorporated by reference herein. Any forward-looking statements made in this joint proxy statement/prospectus are qualified in their entirety by the cautionary statements contained or referred to in this section, and there is no assurance that the actual results or anticipated developments will be realized or that, even if substantially realized, they will have the expected consequences to, or effects on, businesses or operations. All subsequent written and oral forward-looking statements concerning MaxLinear, Entropic, the transactions contemplated by the merger agreement or other matters attributable to MaxLinear or Entropic or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Except to the extent required by applicable law, MaxLinear and Entropic are under no obligation (and expressly disclaim any such obligation) to update or revise their forward-looking statements whether as a result of new information, future events, or otherwise.

 

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INFORMATION ABOUT THE COMPANIES

MaxLinear, Inc.

5966 La Place Court, Suite 100

Carlsbad, California 92008

(760) 692-0711

MaxLinear, Inc., a Delaware corporation and referred to in this joint proxy statement/prospectus as “MaxLinear,” is a provider of integrated, radio-frequency and mixed-signal integrated circuits for broadband communications applications and data center, metro, and long-haul transport network applications. Its high performance radio-frequency, or RF, receiver products capture and process digital and analog broadband signals to be decoded for various applications. These products include both RF receivers and RF receiver systems-on-chip, or SoCs, which incorporate MaxLinear’s highly integrated radio system architecture and the functionality necessary to receive and demodulate broadband signals and physical medium devices, or PMD’s, that provide a constant current source, current-to-voltage regulation, and data alignment and retiming function ability in optical interconnect applications. MaxLinear’s current products receive and process RF and digital signals and enable the display of broadband video content in a wide range of electronic devices, including cable and terrestrial and satellite set top boxes, DOCSIS data and voice gateways, hybrid analog and digital televisions satellite low-noise blockers, or LNB’s, transponders or outdoor units (ODU), and optical modules for data center, metro, and long-haul transport network applications.

Shares of MaxLinear’s Class A common stock are traded on the New York Stock Exchange under the ticker symbol “MXL.”

MaxLinear was incorporated in Delaware in September 2003. MaxLinear’s corporate headquarters are located at 5966 La Place Court, Suite 100, Carlsbad, California 92008, and MaxLinear’s main telephone number at that location is (760) 692-0711. MaxLinear’s corporate website is www.maxlinear.com. The contents of MaxLinear’s website are not incorporated into, or otherwise to be regarded as part of, this joint proxy statement/prospectus. Additional information about MaxLinear and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 192 of this joint proxy statement/prospectus.

Entropic Communications, Inc.

6350 Sequence Drive

San Diego, California 92121

(858) 768-3600

Entropic Communications, Inc., a Delaware corporation and referred to in this joint proxy statement/prospectus as “Entropic,” is a world leader in semiconductor solutions for the connected home. It transforms how traditional HDTV broadcast and Internet protocol, or IP,-based streaming video content is seamlessly, reliably, and securely delivered, processed, and distributed into and throughout the home. Its next-generation Set-top Box, or STB, System-on-a-Chip, or SoC, and home connectivity, or Connectivity, solutions enable global Pay-TV operators to offer consumers more captivating whole-home entertainment experiences by evolving the way digital entertainment is delivered, connected and consumed—in the home and on the go. In mid-2013, Entropic shifted its internal organization structure from a product-driven company into a global solutions and segment-driven organization to better serve its original equipment/device manufacturers and Pay-TV service provider customers. Today, it serves five primary market segments with its technology: Cable, Satellite, Telco/IPTV, MoCA/CE Retail and Media Processing.

Shares of Entropic’s common stock are traded on the Nasdaq Capital Market under the symbol “ENTR.”

Entropic was incorporated in Delaware in January 2001. Entropic’s corporate headquarters are located at 6350 Sequence Drive, San Diego, California 92121, and Entropic’s main telephone number at that location is

 

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(858) 768-3600. Entropic’s corporate website address is www.entropic.com. The contents of Entropic’s website are not incorporated into, or otherwise to be regarded as part of, this joint proxy statement/prospectus. Additional information about Entropic and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 192 of this joint proxy statement/prospectus.

Excalibur Acquisition Corporation and Excalibur Subsidiary, LLC

5966 La Place Court, Suite 100

Carlsbad, California 92008

(760) 692-0711

Excalibur Acquisition Corporation, a newly formed, wholly-owned subsidiary of MaxLinear, is a Delaware corporation formed on January 30, 2015 for the sole purpose of effecting the merger and Excalibur Subsidiary, LLC, a newly formed, wholly-owned subsidiary of MaxLinear, is a Delaware limited liability company formed on January 30, 2015, for the sole purpose of effecting the subsequent merger. Under the merger agreement, Excalibur Acquisition Corporation will merge with and into Entropic and Entropic will continue as the surviving corporation (referred to as the merger). As soon as practicable thereafter, Entropic will merge with and into Excalibur Subsidiary, LLC and Excalibur Subsidiary, LLC will continue as the surviving company and as a wholly-owned subsidiary of MaxLinear (referred to as the subsequent merger).

 

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THE MAXLINEAR SPECIAL MEETING

Date, Time and Place of MaxLinear Special Meeting

The special meeting of MaxLinear stockholders will be held at 8:30 a.m., local time, on Thursday, April 30, 2015, at MaxLinear’s principal executive offices located at 5966 La Place Court, Suite 100, Carlsbad, California 92008.

Purpose of MaxLinear Special Meeting

At the MaxLinear special meeting, the MaxLinear stockholders will be asked to consider and vote on the following proposals:

 

    To approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the Agreement and Plan of Merger and Reorganization (as it may be amended from time to time, the merger agreement), dated as of February 3, 2015, among MaxLinear, Entropic Communications, Inc., Excalibur Acquisition Corporation, and Excalibur Subsidiary, LLC, a copy of which is attached as Annex A to this joint proxy statement/prospectus (referred to as the share issuance proposal); and

 

    To adjourn the MaxLinear special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the share issuance proposal (referred to as the MaxLinear adjournment proposal).

The MaxLinear board unanimously recommends that the MaxLinear stockholders vote “FOR” the share issuance proposal and “FOR” the MaxLinear adjournment proposal.

Record Date; Outstanding Shares; Voting Rights

The MaxLinear board has fixed the close of business on March 30, 2015, as the record date for determination of the stockholders entitled to vote at the MaxLinear special meeting. On the record date, MaxLinear had 38,282,563 shares of common stock issued and outstanding, consisting of 31,310,729 shares of Class A common stock and 6,971,834 shares of Class B common stock.

Each share of MaxLinear Class A common stock and Class B common stock issued and outstanding as of the close of business on March 30, 2015, the record date for the special meeting of stockholders, is entitled to vote on all items being considered at the special meeting. You may vote all shares owned by you as of the record date, including (i) shares held directly in your name as the stockholder of record and (ii) shares held for you as the beneficial owner in street name through a broker, bank, or other nominee.

If your shares are registered directly in your name with MaxLinear’s transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares, the stockholder of record, and the proxy materials were sent directly to you by MaxLinear. MaxLinear has enclosed or sent a proxy card for you to use with the printed proxy materials delivered to you. You have the right to grant your voting proxy directly to MaxLinear’s designated proxies or to vote in person at the special meeting. You may also vote on the Internet or by telephone, as described below under the heading “Voting Procedures.”

If you hold MaxLinear shares in an account at a brokerage firm, bank, trust company or other nominee, you are considered the beneficial owner of shares held in “street name,” and the proxy materials were forwarded to you by that organization. You can vote your shares in the manner prescribed by your broker, bank, trust company or other nominee. Your broker, bank, trust company or other nominee has enclosed or sent a voting instruction card for you to use in directing such broker, bank, trust company or other nominee how to vote your shares. Without instructions from you, your broker, bank, trust company or other nominee cannot vote your shares. Since a beneficial owner is not a stockholder of record, you may not vote your shares in person at the special meeting unless you obtain a “legal proxy” from the broker, bank, trustee, or nominee that holds your shares giving you

 

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the right to vote the shares at the meeting. You may also vote on the Internet or by telephone if Internet or telephone voting is made available by your broker, bank, trust company or other nominee.

In accordance with Delaware law, a list of the names of stockholders of record entitled to vote at the MaxLinear special meeting will be available at the MaxLinear special meeting and for ten days prior to the special meeting for any purpose germane to the special meeting, between the hours of 9:00 a.m. and 4:30 p.m., local time, at MaxLinear’s principal executive offices located at 5966 La Place Court, Suite 100, Carlsbad, California 92008.

Voting Rights for Holders of Class A Common Stock and Class B Common Stock

Holders of MaxLinear’s Class A common stock and Class B common stock have identical voting rights, except that holders of MaxLinear’s Class A common stock are entitled to one vote per share and holders of MaxLinear’s Class B common stock are entitled to ten votes per share with respect to transactions that would result in a change of control of MaxLinear or, in certain cases that relate to MaxLinear’s equity incentive plans. In addition, holders of MaxLinear’s Class B common stock are entitled, voting separately as a class, to elect two members of MaxLinear’s board of directors. The directors elected by holders of MaxLinear’s Class B common stock are Curtis Ling, Ph.D., whose current term will expire at MaxLinear’s annual meeting in 2017, and Kishore Seendripu, Ph.D., whose current term will expire at MaxLinear’s annual meeting in 2015.

On the share issuance proposal and the MaxLinear adjournment proposal, the Class A common stock and Class B common stock will vote together as a single class with each share of Class A common stock and Class B common stock being entitled to one vote for each share held on the record date.

Quorum

The quorum requirement for holding the MaxLinear special meeting and transacting business is that holders of a majority of the voting power of MaxLinear’s issued and outstanding Class A common stock and Class B common stock (voting together as a single class) be present in person or represented by proxy.

Abstentions and “broker non-votes” (if any) will be counted as present for purposes of determining the presence of a quorum for the MaxLinear special meeting.

Required Vote

The voting requirement for each proposal is as follows:

 

Proposal

  

Vote Required to Approve Proposal

To approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement.    The approval of the share issuance proposal requires the affirmative vote of a majority of the votes cast at the MaxLinear special meeting by holders of shares of MaxLinear Class A common stock and Class B common stock, voting together as a single class.
To adjourn the MaxLinear special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the share issuance proposal.    The approval of the MaxLinear adjournment proposal requires the affirmative vote of a majority of the votes cast at the MaxLinear special meeting by holders of shares of MaxLinear Class A common stock and Class B common stock, voting together as a single class.

Effect of Not Voting

If a MaxLinear stockholder does not submit a proxy card or vote at the MaxLinear special meeting, such stockholder’s shares will not be counted as present for the purpose of determining the presence of a quorum,

 

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which is required to transact business at the MaxLinear special meeting, and will otherwise have no effect on the outcome of the share issuance proposal or the MaxLinear adjournment proposal.

Broker Non-Votes

A broker non-vote occurs when a broker, bank or other holder of record holding shares for a beneficial owner does not receive voting instructions from the beneficial owner and either chooses not to vote those shares on a routine matter at the stockholders’ meeting or is not permitted to vote those shares on a non-routine matter. Neither the share issuance proposal nor the MaxLinear adjournment proposal is a routine matter. As a result, if you fail to give voting instructions to your broker, bank or other holder of record, your broker, bank or other holder record may not submit or vote your shares for any purpose at the special meeting and, therefore, your shares (i) will not be considered present for purposes of determining a quorum to transact business at the special meeting, (ii) will not be voted at the special meeting, and (iii) will otherwise have no effect on the outcome of the share issuance proposal or the MaxLinear adjournment proposal.

Abstentions; Incomplete Proxies

If a MaxLinear stockholder submits a proxy card and affirmatively elects to abstain from voting, the shares (i) will be counted as present for purposes of determining the presence of a quorum for the MaxLinear special meeting and (ii) will be treated as votes cast and, therefore, will have the same effect as a vote “AGAINST” the share issuance proposal and the MaxLinear adjournment proposal.

If a MaxLinear stockholder returns a signed proxy card without indicating voting preferences on such proxy card, the shares of MaxLinear Class A common stock or Class B common stock, as applicable, represented by that proxy will be counted as present for purposes of determining the presence of a quorum for the MaxLinear special meeting and all of such shares will be voted as recommended by MaxLinear’s board.

Adjournments

If there is no quorum, the chairman of the MaxLinear special meeting may adjourn the special meeting to another place, date, or time. Even if a quorum is present, the MaxLinear special meeting could be adjourned in order to permit further solicitation of proxies in favor of the share issuance proposal if sufficient votes are cast in favor of the MaxLinear adjournment proposal. If the adjournment is for more than 30 days or if after the adjournment a new record date is set for the adjourned meeting, a notice of the adjourned meeting must be given to each stockholder of record entitled to vote at the MaxLinear special meeting.

Stock Ownership of Directors and Executive Officers of MaxLinear

At the close of business on the record date, 976,045 of the outstanding shares of MaxLinear Class A common stock and 4,673,786 of the outstanding shares of MaxLinear Class B common stock were held by MaxLinear’s directors and executive officers and their affiliates, representing approximately 14.8% of the total outstanding shares of MaxLinear entitled to vote at the MaxLinear special meeting. Simultaneously with the execution and delivery of the merger agreement, certain of the directors and executive officers of MaxLinear (or, in some cases, their affiliated entities), in their respective capacities as stockholders of MaxLinear, entered into voting agreements with Entropic, pursuant to which such stockholders agreed, among other things, to vote their respective shares of Class A common stock and Class B common stock of MaxLinear for the approval of the issuance of shares in the merger pursuant to the terms of the merger agreement.

Voting Procedures

By mail

Complete, sign and date the enclosed proxy card or voting instruction card and return it in the return envelope provided (which is postage prepaid if mailed in the United States) before the MaxLinear special meeting to be held at 8:30 a.m., local time, on April 30, 2015 in Carlsbad, California. If you are a stockholder of

 

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record and the prepaid envelope is missing, please mail your completed proxy card to MaxLinear, Inc., c/o Computershare Trust Company, N.A., P.O. Box 30170, College Station, Texas 77842.

If you are a beneficial owner of shares, you should have received a proxy card and voting instructions with these proxy materials from your broker, bank or other nominee holder of record. Simply complete and mail the voting instruction card provided to the address provided by your broker, bank or other nominee holder of record.

You may still attend the special meeting in person even if you have already voted by proxy.

By telephone or on the Internet

If you are a stockholder of record, you may vote by telephone by calling 1-800-652-VOTE toll-free within the United States, United States territories and Canada on a touch tone telephone or on the Internet at www.investorvote.com/MXL, and otherwise following the telephone or Internet voting instructions on your proxy card.

Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day, 7 days a week, until 1:00 a.m., Central Time, on April 30, 2015.

If you are a beneficial owner of shares, your broker, bank or other holder of record may make telephone or Internet voting available to you. The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank or other nominee holder of record. Therefore, MaxLinear recommends that you follow the voting instructions in the materials you receive.

In Person

Shares held in your name as the stockholder of record may be voted by you in person at the special meeting. Shares held beneficially in street name may be voted by you in person at the special meeting only if you obtain a legal proxy from the broker, bank, or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the special meeting, MaxLinear recommends that you also submit your proxy or voting instructions by mail, or by telephone or on the Internet as described above so that your vote will be counted if you later decide not to attend the meeting.

You are entitled to attend the MaxLinear special meeting only if you were a MaxLinear stockholder as of the record date or you hold a valid proxy for the MaxLinear special meeting. You must present an acceptable form of identification, such as a driver’s license, in order to gain admittance. If you are not a stockholder of record but hold shares as a beneficial owner in street name, you should provide proof of beneficial ownership as of the record date, such as an account statement, a copy of the voting instruction card provided by your broker, bank, or nominee, or other similar evidence of ownership. If you do not comply with the procedures outlined above, you may not be admitted to the special meeting.

Please let MaxLinear know if you plan to attend the meeting by marking the appropriate box on the enclosed proxy card or, if you vote by telephone or Internet, by indicating your plans when prompted.

Revoking Proxies or Voting Instructions

You may change your vote at any time prior to the taking of the vote at the special meeting. If you are the stockholder of record, you may change your vote by (i) granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method), (ii) providing a written notice of revocation to MaxLinear’s corporate secretary at MaxLinear, Inc., 5966 La Place Court, Suite 100, Carlsbad, California 92008 prior to your shares being voted, or (iii) attending the special meeting and voting in person. Attendance at the meeting will not cause your previously

 

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granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank, or nominee following the instructions they provided or, if you have obtained a legal proxy from your broker, bank, or nominee giving you the right to vote your shares, by attending the special meeting and voting in person.

Tabulation of Votes

A representative of MaxLinear’s transfer agent, Computershare Trust Company, N.A., will tabulate the votes and act as inspector of election.

How You Can Reduce the Number of Copies of MaxLinear’s Proxy Materials You Receive

MaxLinear has adopted a procedure approved by the Securities and Exchange Commission called “householding.” Under this procedure, stockholders of record who have the same address and last name and who do not participate in electronic delivery of proxy materials will receive only one copy of the proxy materials, unless one or more of these stockholders notifies MaxLinear that they wish to continue receiving individual copies. This procedure reduces MaxLinear’s printing costs and postage fees. Stockholders who wish to participate in householding will continue to receive separate proxy cards.

If you are eligible for householding, but you and other stockholders of record with whom you share an address currently receive multiple copies of the proxy materials, or if you hold stock in more than one account, and, in either case, you wish to receive only a single copy of the proxy materials for your household, please contact MaxLinear’s transfer agent, Computershare Trust Company, N.A., at P.O. Box 30170, College Station, Texas 77842, by telephoning (800) 662-7232 or (781) 575-4238, or via its Investor Centre at www.computershare.com/investor.

If you participate in householding and wish to receive a separate copy of the proxy materials, or if you do not wish to continue to participate in householding and prefer to receive separate copies of the proxy materials in the future, please contact Computershare Trust Company, N.A., as indicated above.

Beneficial owners can request information about householding from their banks, brokers, or other holds of record.

Solicitation of Proxies

This joint proxy statement/prospectus is furnished in connection with the solicitation of proxies by the MaxLinear board of directors to be voted at the MaxLinear special meeting. MaxLinear will pay the costs of soliciting proxies from MaxLinear stockholders. MaxLinear has retained Georgeson Inc. to assist it in the solicitation of proxies for approximately $17,500, plus reasonable out-of-pocket expenses. MaxLinear has also requested that banks, brokers and other custodians, agents and fiduciaries send these proxy materials to the beneficial owners of MaxLinear’s Class A common stock and Class B common stock they represent and secure their instructions as to the voting of such shares. MaxLinear may reimburse such banks, brokers and other custodians, agents and fiduciaries representing beneficial owners of MaxLinear’s Class A common stock and Class B common stock for their expenses in forwarding solicitation materials to such beneficial owners. Certain of MaxLinear’s directors, officers or employees may also solicit proxies in person, by telephone, or by electronic communications, but they will not receive any additional compensation for doing so.

 

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PROPOSAL 1.

ISSUANCE OF SHARES OF CLASS A COMMON STOCK

IN THE MERGER PURSUANT TO THE TERMS OF THE MERGER AGREEMENT

As discussed elsewhere in this joint proxy statement/prospectus, MaxLinear stockholders are considering and voting to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement. MaxLinear stockholders should read carefully this joint proxy statement/prospectus in its entirety for more detailed information concerning the merger agreement and the merger. In particular, MaxLinear stockholders are directed to the merger agreement which is attached as Annex A to this joint proxy statement/prospectus.

Required Vote

Approval of the issuance of shares of Class A common stock in the merger pursuant to the terms of the merger agreement requires the affirmative vote of a majority of the votes cast. Abstentions will be treated as votes cast and, therefore, will have the same effect as a vote “AGAINST” this proposal. Broker non-votes (if any) will have no effect on the outcome of this proposal.

Recommendation of the Board of Directors of MaxLinear

The MaxLinear board unanimously recommends a vote “FOR” the proposal to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement.

 

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PROPOSAL 2.

ADJOURNMENT TO SOLICIT ADDITIONAL PROXIES

IF NECESSARY OR ADVISABLE

MaxLinear is asking you to authorize the holder of any proxy solicited by the MaxLinear board to vote to adjourn the MaxLinear special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement.

Required Vote

Adjournment of the MaxLinear special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement requires the affirmative vote of a majority of the votes cast. Abstentions will be treated as votes cast and, therefore, will have the same effect as a vote “AGAINST” this proposal. Broker non-votes (if any) will have no effect on the outcome of this proposal.

Recommendation of the Board of Directors of MaxLinear

The MaxLinear board unanimously recommends a vote “FOR” the proposal to adjourn the MaxLinear special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement.

 

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THE ENTROPIC SPECIAL MEETING

Date, Time and Place of Entropic Special Meeting

The special meeting of Entropic stockholders will be held at 10:00 a.m., local time, on Thursday, April 30, 2015, at Entropic’s principal executive offices located at 6350 Sequence Drive, San Diego, California 92121.

Purpose of Entropic Special Meeting

At the Entropic special meeting, the Entropic stockholders will be asked to consider and vote on the following proposals:

 

  1. To adopt the Agreement and Plan of Merger and Reorganization (as it may be amended from time to time, the merger agreement), dated as of February 3, 2015, among Entropic, MaxLinear, Inc., Excalibur Acquisition Corporation, and Excalibur Subsidiary, LLC, a copy of which is attached as Annex A to this joint proxy statement/prospectus (referred to as the merger proposal);

 

  2. To approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to Entropic’s named executive officers that is based on or otherwise relates to the merger agreement and the transactions contemplated by the merger agreement (referred to as the compensation proposal); and

 

  3. To adjourn the Entropic special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to adopt the merger agreement (referred to as the Entropic adjournment proposal).

The Entropic board unanimously recommends that the Entropic stockholders vote “FOR” the merger proposal, “FOR” the compensation proposal, and “FOR” the Entropic adjournment proposal.

Record Date; Outstanding Shares; Voting Rights

The Entropic board has fixed the close of business on March 18, 2015, as the record date for determination of the stockholders entitled to vote at the Entropic special meeting. On the record date, Entropic had 91,103,508 shares of common stock issued and outstanding.

Each share of Entropic common stock issued and outstanding as of the close of business on March 18, 2015, the record date for the special meeting of stockholders, is entitled to vote on all items being considered at the special meeting. You may vote all shares owned by you as of the record date, including (i) shares held directly in your name as the stockholder of record and (ii) shares held for you as the beneficial owner in street name through a broker, bank, or other nominee.

Each holder of shares of Entropic common stock will be entitled to one vote per share for each share of Entropic common stock held as of the record date.

If your shares are registered directly in your name with Entropic’s transfer agent, American Stock Transfer and Trust Company, LLC, you are considered, with respect to those shares, the stockholder of record, and the proxy materials were sent directly to you by Entropic. Entropic has enclosed or sent a proxy card for you to use with the printed proxy materials delivered to you. You have the right to grant your voting proxy directly to Entropic’s designated proxies or to vote in person at the special meeting. You may also vote on the Internet or by telephone, as described below under the heading “Voting Procedures.”

If you hold Entropic shares in an account at a brokerage firm, bank, trust company or other nominee, you are considered the beneficial owner of shares held in “street name,” and the proxy materials were forwarded to you by that organization. You can vote your shares in the manner prescribed by your broker, bank, trust company or other nominee. Your broker, bank, trust company or other nominee has enclosed or sent a voting instruction card for you to use in directing such broker, bank, trust company or other nominee how to vote your shares. Without instructions from you, your broker, bank, trust company or other nominee cannot vote your shares. Since

 

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a beneficial owner is not a stockholder of record, you may not vote your shares in person at the special meeting unless you obtain a “legal proxy” from the broker, bank, trustee, or nominee that holds your shares giving you the right to vote the shares at the meeting. You may also vote on the Internet or by telephone if Internet or telephone voting is made available by your broker, bank, trust company or other nominee.

In accordance with Delaware law, a list of the names of stockholders of record entitled to vote at the Entropic special meeting will be available at the Entropic special meeting and for ten days prior to the special meeting for any purpose germane to the special meeting, between the hours of 9:00 a.m. and 4:30 p.m., local time, at Entropic’s principal executive offices located at 6350 Sequence Drive, San Diego, California 92121.

Quorum

The quorum requirement for holding the Entropic special meeting and transacting business is that holders of a majority of Entropic’s outstanding shares of common stock entitled to vote at the special meeting, must be present in person or represented by proxy.

Abstentions and broker non-votes (if any) will be counted for purposes of determining the presence of a quorum for the Entropic special meeting.

Required Vote

The voting requirement for each proposal is as follows:

 

Proposal

  

Vote Required to Approve Proposal

To adopt the merger agreement.    The approval of the merger proposal requires the affirmative vote of a majority of the outstanding shares of Entropic’s common stock.
To approve, on an advisory (non-binding) basis the compensation that may be paid or become payable to Entropic’s named executive officers that is based on or otherwise relates to the merger agreement and the transactions contemplated by the merger agreement.    The approval of the compensation proposal requires the affirmative vote of a majority of the shares present at the meeting in person or by proxy.
To adjourn the Entropic special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to adopt the merger agreement.    The approval of the Entropic adjournment proposal requires the affirmative vote of a majority of the shares present at the meeting in person or by proxy.

Effect of Not Voting

If an Entropic stockholder does not submit a proxy card or vote at the Entropic special meeting, such stockholder’s shares will not be counted as present for the purpose of determining the presence of a quorum, which is required to transact business at the Entropic special meeting, and will otherwise have no effect on the compensation proposal or the Entropic adjournment proposal. However, failure to vote in person or by proxy at the special meeting will have the same effect as a vote “AGAINST” the merger proposal.

Broker Non-Votes

A broker non-vote occurs when a broker, bank or other holder of record holding shares for a beneficial owner does not receive voting instructions from the beneficial owner and either chooses not to vote those shares on a routine matter at the stockholders’ meeting or is not permitted to vote those shares on a non-routine matter.

 

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None of the merger proposal, the compensation proposal, or the Entropic adjournment proposal is a routine matter. As a result, if you fail to give voting instructions to your broker, bank or other holder of record, your broker, bank or other holder record may not submit or vote your shares for any purpose at the special meeting and, therefore, your shares (i) will not be considered present for purposes of determining a quorum to transact business at the special meeting, (ii) will not be voted at the special meeting, (iii) will have the same effect as a vote “AGAINST” the merger proposal, and (iv) will otherwise have no effect on the outcome of the share compensation proposal or the Entropic adjournment proposal.

Abstentions; Incomplete Proxies

If an Entropic stockholder submits a proxy card and affirmatively elects to abstain from voting, the shares (i) will be counted as present for purposes of determining the presence of a quorum for the Entropic special meeting and (ii) will have the same effect as a vote “AGAINST” the merger proposal, the compensation proposal, and the Entropic adjournment proposal.

If an Entropic stockholder returns a signed proxy card without indicating voting preferences on such proxy card, the shares of Entropic common stock represented by that proxy will be counted as present for purposes of determining the presence of a quorum for the Entropic special meeting and all of such shares will be voted as recommended by Entropic’s board.

Adjournments

If there is no quorum, the chairman of the Entropic special meeting or holders of a majority of the votes present at the Entropic special meeting may adjourn the special meeting to another place, date, or time. Even if a quorum is present, the Entropic special meeting could be adjourned in order to permit further solicitation of proxies in favor of the merger proposal if sufficient votes are cast in favor of the Entropic adjournment proposal. If the adjournment is for more than 30 days or if after the adjournment a new record date is set for the adjourned meeting, a notice of the adjourned meeting must be given to each stockholder of record entitled to vote at the Entropic special meeting.

Stock Ownership of Directors and Executive Officers of Entropic

At the close of business on the record date, 621,764 of the outstanding shares of Entropic common stock were held by Entropic’s directors and executive officers and their affiliates, representing approximately 0.7% of the total outstanding shares of Entropic entitled to vote at the Entropic special meeting. Simultaneously with the execution and delivery of the merger agreement, each of the directors and executive officers of Entropic, in their respective capacities as stockholders of Entropic, entered into voting agreements with MaxLinear, pursuant to which such stockholders agreed, among other things, to vote their respective shares of Entropic common stock for the adoption of the merger agreement.

Voting Procedures

By mail

Complete, sign and date the enclosed proxy card or voting instruction card and return it in the return envelope provided (which is postage prepaid if mailed in the United States) before the Entropic special meeting to be held at 10:00 a.m., local time, on April 30, 2015 in San Diego, California. If you are a stockholder of record and the prepaid envelope is missing, please mail your completed proxy card to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

If you are a beneficial owner of shares, you should have received a proxy card and voting instructions with these proxy materials from your broker, bank or other nominee holder of record. Simply complete and mail the voting instruction card provided to the address provided by your broker, bank or other nominee holder of record.

You may still attend the special meeting in person if you have already voted by proxy.

 

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By telephone or on the Internet

If you are a stockholder of record, you may vote by telephone by calling 1-800-690-6903 or on the Internet at www.proxyvote.com.

Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day, 7 days a week, until 11:59 p.m., Eastern Time, on April 29, 2015.

If you are a beneficial owner of shares, your broker, bank or other holder of record may make telephone or Internet voting available to you. The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank or other nominee holder of record. Therefore, Entropic recommends that you follow the voting instructions in the materials you receive.

In Person

Shares held in your name as the stockholder of record may be voted by you in person at the special meeting. Shares held beneficially in street name may be voted by you in person at the special meeting only if you obtain a legal proxy from the broker, bank, or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the special meeting, Entropic recommends that you also submit your proxy or voting instructions by mail, or by telephone or on the Internet as described above so that your vote will be counted if you later decide not to attend the meeting.

You are entitled to attend the Entropic special meeting only if you were an Entropic stockholder as of the record date or you hold a valid proxy for the Entropic special meeting. You must present an acceptable form of identification, such as a driver’s license, in order to gain admittance. If you are not a stockholder of record but hold shares as a beneficial owner in street name, you should provide proof of beneficial ownership as of the record date, such as an account statement, a copy of the voting instruction card provided by your broker, bank, or nominee, or other similar evidence of ownership. If you do not comply with the procedures outlined above, you may not be admitted to the special meeting.

Revoking Proxies or Voting Instructions

You may change your vote at any time prior to the taking of the vote at the special meeting. If you are the stockholder of record, you may change your vote by (i) granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method), (ii) providing a written notice of revocation to Entropic’s corporate secretary at Entropic Communications, Inc., 6350 Sequence Drive, San Diego, California 92121 prior to your shares being voted, or (iii) attending the special meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank, or nominee following the instructions they provided or, if you have obtained a legal proxy from your broker, bank, or nominee giving you the right to vote your shares, by attending the special meeting and voting in person.

Tabulation of Votes

A representative of Entropic’s mailing and tabulating agent, Broadridge Financial Solutions, will tabulate the votes and Entropic’s corporate secretary will act as inspector of election.

How You Can Reduce the Number of Copies of Entropic’s Proxy Materials You Receive

Entropic has adopted a procedure approved by the Securities and Exchange Commission called “householding.” Under this procedure, stockholders of record who have the same address and last name and who do not participate in electronic delivery of proxy materials will receive only one copy of the proxy materials,

 

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unless one or more of these stockholders notifies Entropic that they wish to continue receiving individual copies. This procedure reduces MaxLinear’s printing costs and postage fees. Stockholders who wish to participate in householding will continue to receive separate proxy cards.

If you are eligible for householding, but you and other stockholders of record with whom you share an address currently receive multiple copies of the proxy materials, or if you hold stock in more than one account, and, in either case, you wish to receive only a single copy of the proxy materials for your household, please contact Entropic’s transfer agent, American Stock Transfer and Trust Company, LLC at 59 Maiden Lane, New York, New York 10038, by telephoning (800) 937-5449, or via www.amstock.com.

If you participate in householding and wish to receive a separate copy of the proxy materials, or if you do not wish to continue to participate in householding and prefer to receive separate copies of the proxy materials in the future, please contact American Stock Transfer and Trust Company, LLC, as indicated above.

Beneficial owners can request information about householding from their banks, brokers, or other holds of record.

Solicitation of Proxies

This joint proxy statement/prospectus is furnished in connection with the solicitation of proxies by the Entropic board of directors to be voted at the Entropic special meeting. Entropic will pay the costs of soliciting proxies from Entropic stockholders. Entropic has retained MacKenzie Partners, Inc. to assist it in the solicitation of proxies for approximately $40,000, plus reasonable out-of-pocket expenses. Entropic has also requested that banks, brokers and other custodians, agents and fiduciaries send these proxy materials to the beneficial owners of Entropic’s common stock they represent and secure their instructions as to the voting of such shares. Entropic may reimburse such banks, brokers and other custodians, agents and fiduciaries representing beneficial owners of Entropic’s common stock for their expenses in forwarding solicitation materials to such beneficial owners. Certain of Entropic’s directors, officers or employees may also solicit proxies in person, by telephone, or by electronic communications, but they will not receive any additional compensation for doing so.

 

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PROPOSAL 1.

THE MERGER AGREEMENT

As discussed elsewhere in this joint proxy statement/prospectus, Entropic stockholders are considering and voting to adopt the merger agreement. Entropic stockholders should read carefully this joint proxy statement/prospectus in its entirety for more detailed information concerning the merger agreement and the merger. In particular, Entropic stockholders are directed to the merger agreement which is attached as Annex A to this joint proxy statement/prospectus.

Required Vote

The adoption of the merger agreement requires the affirmative vote of a majority of the outstanding shares of Entropic’s common stock. Failure to vote in person or by proxy at the special meeting, abstentions, and broker non-votes (if any) will have the same effect as a vote “AGAINST” the merger proposal.

Recommendation of the Board of Directors of Entropic

The Entropic board unanimously recommends a vote “FOR” the proposal to adopt the merger agreement.

 

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PROPOSAL 2.

ADVISORY VOTE TO APPROVE MERGER-RELATED COMPENSATION FOR ENTROPIC’S

NAMED EXECUTIVE OFFICERS

Under Section 14A of the Securities Exchange Act of 1934 and the applicable Securities and Exchange Commission rules issued thereunder, Entropic is required to submit a proposal to its stockholders for a non-binding, advisory vote to approve certain compensation that may be paid or become payable to Entropic’s named executive officers that is based on or otherwise relates to the merger agreement and the transactions contemplated by the merger agreement. This compensation is summarized in the table captioned “The Merger—Interests of the Directors and Executive Officers of Entropic in the Merger” beginning on page 118 of this joint proxy statement/prospectus, including the footnotes to the table and narrative disclosures set forth in the section. The Entropic board encourages you to review carefully the named executive officer merger-related compensation information disclosed in this joint proxy statement/prospectus. The vote on the compensation proposal is a vote separate and apart from the vote on the merger proposal. Accordingly, you may vote to approve the merger proposal and vote not to approve the compensation proposal and vice versa. Because the vote on the compensation proposal is advisory only, it will not be binding on either Entropic or MaxLinear. Accordingly, if the merger agreement is adopted and the merger is completed, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the vote on the compensation proposal.

Required Vote

Approval, on an advisory (non-binding) basis, of the compensation that may be paid or become payable to Entropic’s named executive officers that is based on or otherwise relates to the merger agreement and the transactions contemplated by the merger agreement requires the affirmative vote of a majority of the shares of Entropic common stock present at the special meeting in person or by proxy. Abstentions will have the same effect as a vote “AGAINST” the compensation proposal and “broker non-votes” (if any) will have no effect on the outcome of such proposal.

Recommendation of the Board of Directors of Entropic

The Entropic board unanimously recommends a vote “FOR” the approval, on an advisory (non-binding) basis, the compensation that may be paid or become payable to Entropic’s named executive officers that is based on or otherwise relates to the merger agreement and the transactions contemplated by the merger agreement.

 

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PROPOSAL 3.

POSSIBLE ADJOURNMENT TO SOLICIT ADDITIONAL PROXIES

IF NECESSARY OR ADVISABLE

Entropic is asking you to authorize the holder of any proxy solicited by the Entropic board to vote to adjourn the Entropic special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to adopt the merger agreement.

Required Vote

Adjournment of the Entropic special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to adopt the merger agreement requires the affirmative vote of a majority of the shares of Entropic common stock present at the special meeting in person or by proxy. Abstentions will have the same effect as a vote “AGAINST” the Entropic adjournment proposal and “broker non-votes” (if any) will have no effect on the outcome of such proposal.

Recommendation of the Board of Directors of Entropic

The Entropic board unanimously recommends a vote “FOR” the proposal to adjourn the Entropic special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to adopt the merger agreement.

 

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THE MERGER

The following is a description of the material aspects of the merger, including the merger agreement. While we believe that the following description covers the material terms of the merger, the description may not contain all of the information that is important to you. We encourage you to read carefully this entire joint proxy statement/prospectus, including the merger agreement attached to this joint proxy statement/prospectus as Annex A, for a more complete understanding of the merger.

General

MaxLinear and Entropic agreed to the acquisition of Entropic by MaxLinear under the terms of the merger agreement that is described in this joint proxy statement/prospectus. Under the merger agreement, Excalibur Acquisition Corporation, a wholly-owned subsidiary of MaxLinear, will merge with and into Entropic and Entropic will continue as the surviving corporation. As soon as practicable thereafter, Entropic will merge with and into Excalibur Subsidiary, LLC, a wholly-owned subsidiary of MaxLinear, and Excalibur Subsidiary, LLC will continue as the surviving company and as a wholly-owned subsidiary of MaxLinear.

The MaxLinear board is using this joint proxy statement/prospectus to solicit proxies from the holders of MaxLinear Class A common stock and Class B common stock for use at the MaxLinear special meeting. At the MaxLinear special meeting, holders of shares of MaxLinear Class A common stock and Class B common stock will be asked to vote on (i) a proposal to approve the issuance of the shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement and (ii) a proposal to adjourn the MaxLinear special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement. This joint proxy statement/prospectus also forms a part of the registration statement that will be used by MaxLinear in connection with the offering of MaxLinear Class A common stock if the merger is completed.

The Entropic board is using this joint proxy statement/prospectus to solicit proxies from the holders of Entropic common stock for use at the Entropic special meeting. At the Entropic special meeting, holders of shares of Entropic common stock will be asked to vote on (i) a proposal to adopt the merger agreement, (ii) a proposal to approve, on an advisory (non-binding) basis the compensation that may be paid or become payable to Entropic’s named executive officers that is based on or otherwise relates to the merger agreement and the transactions contemplated by the merger agreement, and (iii) a proposal to adjourn the Entropic special meeting if necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to adopt the merger agreement.

Upon completion of the merger, each share of Entropic common stock outstanding immediately prior to the effective time of the merger (other than those shares for which appraisal rights are validly perfected or those shares owned by MaxLinear or Entropic or their respective subsidiaries or held in treasury of Entropic, such shares collectively referred to as the excluded shares) will be canceled and converted into the right to receive (i) $1.20 in cash, without interest, (ii) 0.2200 of a share of MaxLinear Class A common stock, and (iii) cash payable in lieu of any fractional shares (referred to collectively as the merger consideration).

The cash portion of the merger consideration will be derived from Entropic’s cash and, if necessary, MaxLinear’s cash, in accordance with the terms of the merger agreement. Specifically, under the merger agreement, at or prior to the effective time, Entropic will deposit with the exchange agent an aggregate amount of cash as directed by MaxLinear (not to exceed the aggregate amount of cash then held by Entropic and its subsidiaries, less $10,000,000) and MaxLinear will deposit with the exchange agent an aggregate amount of cash equal to the remaining amount of cash required to pay the cash portion of the merger consideration under the merger agreement.

 

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Background of the Merger

The following information was prepared by Entropic and MaxLinear. Information about Entropic was provided by Entropic, and MaxLinear takes no responsibility for the accuracy or completeness of such information regarding meetings or discussions in which MaxLinear or its representatives did not participate. Information about MaxLinear was provided by MaxLinear, and Entropic does not take any responsibility for the accuracy or completeness of such information regarding meetings or discussions in which Entropic or its representatives did not participate.

The board of directors of Entropic, together with its senior management, regularly reviews its business strategy and evaluates opportunities to expand its product offerings and strengthen its competitive position. Similarly, MaxLinear’s board of directors and management regularly review its business strategy and product offerings, including periodic review of potential corporate development opportunities such as acquisitions.

On June 9, 2014, Entropic announced that it was reducing its revenue and operating loss guidance. In addition, in a related effort to reduce operating costs, Entropic announced that it was closing facilities located in Texas, India, Israel and Taiwan and that it was reducing its overall work force by approximately 23%.

On August 4, 2014, Entropic’s board of directors held a special meeting in which senior management participated. During the meeting, senior management updated the board on uncertainty in Entropic’s longer term revenue outlook for set-top-box system-on-a-chip (STB SoCs) in light of one customer’s changes in its deployment plans for Entropic’s proposed STB SoC with integrated MoCA and other factors such as industry consolidation among service providers. In response to management’s update, the board determined to retain a financial advisor and to pursue a review of Entropic’s strategic alternatives, both with respect to Entropic’s STB SoC business and with regard to the company as a whole.

From time to time over several years since MaxLinear’s initial public offering, members of Entropic’s and MaxLinear’s respective management teams had engaged in high level conversations about the potential for a strategic transaction based on the companies’ shared core competencies and target markets and close physical proximity in the San Diego area. None of these conversations developed into substantive discussions.

On August 6, 2014, David Lyle, Entropic’s Chief Financial Officer, and Adam Spice, MaxLinear’s Chief Financial Officer met to discuss the potential for combining the two companies. Mr. Spice indicated that he would raise the topic with Kishore Seendripu, Ph.D., MaxLinear’s Chief Executive Officer, and let Mr. Lyle know if MaxLinear wished to pursue further conversations.

On August 8, 2014, Patrick Henry, Entropic’s then Chief Executive Officer, and Mr. Lyle met with Dr. Seendripu and Mr. Spice at an offsite location in Encinitas, California to discuss the potential for a business combination.

On Sunday, August 10, 2014, Mr. Henry, Matt Rhodes, Entropic’s Senior Vice President, Global Marketing, Al Servati, Entropic’s Vice President, Marketing, and Mr. Lyle met with Dr. Seendripu, Mr. Spice and certain other members of MaxLinear’s management team at MaxLinear’s offices in Carlsbad, California to provide a business presentation on Entropic. In connection with that presentation, MaxLinear and Entropic entered into a standard non-disclosure agreement.

On August 15, 2014, the board of directors of Entropic acted by unanimous written consent to update the charter of an existing ad hoc committee of the Entropic board, the Strategic Committee consisting of three independent directors, Umesh Padval (Chairman), Robert Bailey and Theodore Tewksbury, Ph.D. The charter of the Strategic Committee was updated to ensure the specific authority, consistent with prior board discussions, of the Strategic Committee relating to the strategic review process. In particular, the revised written charter authorized the Entropic Strategic Committee to (i) advise, direct and oversee the management of Entropic in the review of strategic alternatives, (ii) evaluate indications of interest or any specific proposals or offers received by Entropic relating to potential strategic transactions, (iii) determine whether and when to solicit indications of

 

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interest or proposals or other alternatives, (iv) make recommendations to the board of directors of Entropic with respect to any proposals and offers received by Entropic or alternatives (noting that the board of directors of Entropic reserves the authority to approve any specific transaction recommended to it by the Entropic Strategic Committee), (v) review and approve the engagement of a financial advisor to assist in the review of strategic alternatives, and (vi) engage in other ancillary activities.

Between August 5 and August 15, 2014, Mr. Henry and Mr. Lyle contacted representatives from several investment banking firms to interview such firms and determine their interest in acting as Entropic’s financial advisor in connection with its review of strategic alternatives.

On August 18, 2014, Entropic’s Strategic Committee held a meeting in which senior management participated to review Entropic’s alternatives as a standalone company, including strategies to address revenue growth and profitability concerns. Entropic’s management also recommended that Barclays Capital Inc. (referred to as Barclays) be engaged as Entropic’s financial advisor with respect to the review of strategic alternatives. In connection with such recommendation, senior management discussed the approach proposed by Barclays for the engagement and a preliminary list of candidates that representatives of Barclays had identified as potential buyers of Entropic. The Strategic Committee tentatively approved the engagement of Barclays and provided feedback on the process proposed by representatives of Barclays to identify potential buyers of Entropic or certain of its assets.

On August 20, 2014, MaxLinear’s board of directors held a regularly scheduled meeting in Carlsbad, California. During the meeting, Mr. Spice made a presentation concerning strategic and financial considerations relating to a potential acquisition of Entropic, and MaxLinear’s board and management discussed the various opportunities and challenges such a transaction would present. While MaxLinear’s board believed that an acquisition of Entropic at a reasonable valuation offered potential strategic opportunities to MaxLinear, it determined that it was unwilling to make an offer for Entropic at that time. Among other considerations, the MaxLinear board viewed certain of Entropic’s product lines to be of greater strategic interest than others and preferred to see whether a larger semiconductor company with greater resources acquired Entopic in its entirety.

On September 3, 2014, the board of directors of Entropic met with senior management and representatives of Barclays. The representatives of Barclays reviewed five potential projected revenue and profit and loss scenarios prepared by management, representing potential strategic options for Entropic with regard to products to be developed or discontinued and implications for Entropic’s revenues and expenses as a standalone company. Following a review of the scenarios, the board of directors of Entropic determined, after consultation with representatives of Barclays that Entropic should issue a press release indicating that Entropic was reviewing strategic alternatives because the board believed, and representatives of Barclays agreed, that Entropic would generate more interest through a public announcement of the process than through purely private approaches. The board considered the potential destabilizing impact of such an announcement among Entropic’s employees and customers but concluded competitors were already using existing uncertainty about Entropic’s future prospects to predict Entropic’s demise. The board approved making such an announcement in conjunction with a pre-announcement of third quarter earnings. After the representatives of Barclays left the meeting, the board of directors of Entropic also approved the formal engagement of Barclays to serve as Entropic’s financial advisor in connection with the strategic review process. In addition, Entropic’s senior management reviewed in greater depth four of the scenarios previously presented by Barclays, including the restructuring of Entropic’s business and the related expense savings that would be required to achieve these scenarios.

On September 4, 2014, Mr. Padval, chairman of Entropic, had a telephone conversation with Donald E. Schrock, a member of MaxLinear’s board of directors. Mr. Padval and Mr. Schrock serve together on the board of directors of Integrated Device Technologies, Inc. (referred to as IDT), a public semiconductor company based in Silicon Valley. Mr. Padval inquired whether Mr. Schrock had been made aware of the conversations between the MaxLinear and Entropic management teams, which Mr. Schrock confirmed. Mr. Padval indicated that Entropic was initiating a strategic review process, and following a brief discussion of Entropic’s product lines, Mr. Schrock indicated that MaxLinear’s board did not view an acquisition of Entropic as a whole to be likely but that MaxLinear could be interested in certain product lines if Entropic or an Entropic acquiror was considering product line divestitures.

 

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On September 9, 2014, MaxLinear issued a press release announcing revised revenue and gross margin guidance for the quarter ending September 30, 2014 and commenting on the outlook for MaxLinear’s cable and satellite businesses.

On September 11, 2014, the Entropic Strategic Committee held a meeting in which senior management of Entropic participated. During the meeting, the committee approved the terms of the engagement letter with Barclays, and Entropic subsequently executed such engagement letter. The Committee also approved the announcement of the strategic review process.

On September 12, 2014 and on September 26, 2014, Messrs. Henry and Lyle and representatives of Barclays, on behalf of Entropic, met with Dr. Seendripu, Mr. Spice and representatives of Stifel, Nicolaus & Company, Incorporated (referred to as Stifel), on behalf of MaxLinear, to conduct a business and financial review of both Entropic and MaxLinear. The September 12, 2014 meeting took place at the offices of Cooley LLP (referred to as Cooley), outside counsel to Entropic, in San Diego, California, and the September 26, 2014 meeting took place at the offices of Wilson Sonsini Goodrich & Rosati, P.C. (referred to as WSGR), outside counsel to MaxLinear, in San Diego, California. At this point, MaxLinear had not formally engaged Stifel. Prior to its formal engagement on January 30, 2015, Stifel assisted MaxLinear in its review of Entropic as described further below.

On September 16, 2014, Entropic publicly announced that it was initiating a strategic review process and that it had engaged Barclays in connection with these efforts. Following this announcement, at the direction of the board of directors of Entropic, representatives of Barclays reached out to 36 potential strategic and financial buyers to discuss alternative potential transactions that included the sale of the entire company, the sale of Entropic’s STB SoC business or the sale of certain of Entropic’s patent portfolios. Ten of the companies contacted in the process, including MaxLinear, ultimately signed confidentiality agreements, received management presentations and engaged in discussions with the Entropic management team. Most of the confidentiality agreements included standstill provisions (some of which terminated automatically upon execution of the merger agreement and all of which permitted ongoing private communications with Entropic). From time to time during the months of October and November, 2014, representatives of Barclays followed up with potential buyers that it had contacted or that had participated in the management presentations to determine whether such potential buyers would conduct diligence or submit proposals and none of these parties, other than MaxLinear, ultimately submitted a proposal or conducted any further due diligence with Entropic.

On September 16, 2014, Entropic and MaxLinear entered into a mutual confidentiality agreement with retroactive effect from August 10, 2014 that covered discussions relating to an acquisition and contained a twelve month standstill period that permitted ongoing private discussions and terminated if Entropic announced a transaction with another party and an employee non-solicitation covenant.

On September 25, 2014, the board of directors of Entropic held a regularly scheduled quarterly board meeting. During the meeting, representatives of Barclays reviewed the strategic review process to date, including outreach to potential buyers of the company as a whole and strategies for alternative ways to maximize value through asset or patent portfolio sales. Mr. Henry also reviewed the results of the management team’s update of Entropic’s annual strategic long-range plan, including a summary of market dynamics in each product segment and a roadmap for developing new chips within each of the Entropic’s product lines through 2015 and beyond. The board discussed the potential opportunities and risks associated with the long-range plan in which Entropic was not sold but continued to do business as a standalone company.

On October 2, 2014, MaxLinear’s board of directors held a special meeting with the principal purpose of approving MaxLinear’s acquisition of Physpeed Co., Ltd. In addition, management made a presentation concerning its review of Entropic’s product portfolio, trends affecting Entropic’s revenue in specific product markets, and the reasons for and against pursuing an acquisition of Entropic. Representatives of Stifel made a presentation concerning consolidation trends in the semiconductor industry and reviewed the financial aspects of a potential combination of Entropic and MaxLinear.

 

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On October 9, 2014, Mr. Lyle and Mr. Spice met at an offsite location in Encinitas, California to discuss the impact of Entropic’s public announcement of its strategic review process on the ongoing discussions between MaxLinear and Entropic. Mr. Spice conveyed to Mr. Lyle the sensitivity of MaxLinear’s board to valuation considerations and the MaxLinear board’s preference that Entropic conduct its strategic review process and exit or restructure its STB SoC business before engaging in further discussions, particularly in light of MaxLinear’s September 9, 2014 announcement revising its financial guidance and outlook.

On October 13, 2014, the board of directors of Entropic held a special meeting with senior management and representatives of Barclays. The representatives of Barclays updated the board on the strategic review process, including outreach and feedback from contacted parties. After the representatives of Barclays left the meeting, senior management continued to discuss with the board their recent meetings with potential parties. Based on this feedback, the board tentatively concluded that potential acquirers did not place substantial value on Entropic’s future STB SoC business and that Entropic could not reasonably sustain the ongoing levels of investment required to continue to develop new STB SoC products on its own. Management was instructed to review the STB SoC business to determine whether new product development should be curtailed and the resulting savings used to help return Entropic to profitability on a non-GAAP basis.

On October 23, 2014, the board of directors of Entropic held a special meeting with senior management to review a potential revised strategy intended to enhance Entropic’s value as a standalone company or make Entropic a more attractive acquisition candidate. During the meeting, senior management reviewed long-term market trends for client and gateway STB SoC products, revenue prospects for Entropic’s existing and future STB SoC products, the growing investment required to sustain the STB SoC business, and the lack of interest by prospective acquirers in that business. Given this situation, management presented an alternative strategy and product roadmap whereby Entropic could reduce operating expenses, and focus on its connectivity products and full band capture applications for its mixed-signal and Digital Signal Processing (DSP) technologies. Management also reviewed plant closures and other preliminary restructuring steps that would need to be implemented as part of this revised strategic plan and the financial impact associated with such plan and updated the board on the status of the outreach to potential parties in connection with the strategic review process. Following a discussion, the board authorized management to proceed with this strategy and to complete the proposed restructuring plan but requested additional analysis with respect to one particular line of STB SoC products under development and requested that management prepare a detailed restructuring plan to implement the proposed strategy.

On October 28, 2014, the board of directors of Entropic held a special meeting to permit senior management to provide the additional analyses requested by the board on October 23, 2014. Management provided the board a detailed analysis of one STB SoC product line under development, including management’s estimate of Entropic’s financial results with or without the commercialization of this new product line. After an extensive discussion, the board determined that Entropic should not commercialize this product line and that this decision should be factored into the detailed restructuring plan that management was preparing.

On October 28, 2014, Entropic was first contacted by Company A, a financial investor in China, regarding a possible transaction after Company A reviewed Entropic’s press release on the strategic review process.

On November 6, 2014, the board of directors of Entropic held a special meeting in which senior management participated. During the meeting, the board reviewed with management the details of the proposed restructuring plan and the revised financial analysis reflecting the plant closures and other restructuring steps reflected in the plan. Following discussion, the board formally approved the restructuring plan. The board also appointed Dr. Tewksbury as interim Chief Executive Officer following Mr. Henry’s termination as Chief Executive Officer on November 6, 2014 (which termination was made effective as of November 10, 2014). In connection therewith, the board replaced the Strategic Committee with an Executive Committee and named Umesh Padval, Robert Bailey and William Bock to the Executive Committee. The Executive Committee was delegated with the authority of the former Strategic Committee and given authority to approve certain operational matters while Dr. Tewksbury served as interim Chief Executive Officer and to conduct a search for a new Chief Executive Officer.

 

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On November 7, 2014 Entropic entered into a confidentiality agreement with Company A, which included a twelve month stand-still provision but permitted ongoing private communications with Entropic.

On November 10, 2014, Entropic announced a restructuring strategy to refocus on its core connectivity business, which included the layoff of approximately 200 additional employees (or approximately 40% of its workforce). As a result of the restructuring plan, Entropic announced that it expected to realize approximately $11 million in non-GAAP quarterly savings. As part of this restructuring, Entropic also announced Mr. Henry’s termination as Chief Executive Officer of Entropic and Dr. Tewksbury’s appointment as Entropic’s Interim Chief Executive Officer.

On November 19, 2014, MaxLinear’s board of directors held a regularly scheduled meeting at MaxLinear’s offices in Irvine, California. During the meeting, MaxLinear’s management reviewed with the board recent developments in Entropic’s business, outlined Entropic’s recent financial performance, and reviewed potential combined operating result scenarios if MaxLinear were to acquire Entropic. The board and management also discussed potential strategic rationales for a transaction with Entropic, risks and challenges to completing and effectively integrating such an acquisition, and potential strategies to mitigate those risks if an acquisition occurred. Based on management’s presentation, the board viewed an acquisition of Entropic as a potentially attractive strategic transaction for MaxLinear but determined that its willingness to approve any acquisition would depend heavily on valuation, particularly given substantial anticipated declines in Entropic’s future revenues for non-MoCA products.

On November 20, 2014, Mr. Lyle had a telephone conversation with Mr. Spice to provide an update on Entropic’s restructuring efforts following the layoffs announced earlier in the month. Messrs. Lyle and Spice revisited the potential for a transaction between Entropic and MaxLinear, and each described their respective boards’ general expectations with respect to the terms and conditions that would be necessary to merit continued discussion.

On November 25, 2014, Mr. Schrock contacted Mr. Padval to make an introduction to Thomas E. Pardun, a member of MaxLinear’s board and its lead director. MaxLinear’s board initiated this introduction based on its view that discussions between the parties had been continuing for some time without resolution and its desire to determine whether the parties’ respective understandings concerning the strategic opportunity and risks as well as potential valuations were sufficiently aligned to merit further discussion.

On November 28, 2014, MaxLinear’s board of directors held a special meeting in which representatives of Stifel participated. During the meeting, representatives of Stifel reviewed with the board the financial aspects of a potential acquisition of Entropic, including key assumptions and trends in the two companies’ respective target markets. Following the discussion, MaxLinear’s board determined that MaxLinear should engage with Entropic to ascertain its board’s expectations with respect to the terms of a potential offer but that MaxLinear would not provide a formal written offer at this time.

On November 28, 2014, Company A submitted a written but unsigned non-binding indication of interest in acquiring Entropic for cash at a valuation in the range of 120% to 150% of the mean market capitalization of Entropic for the 20 trading days prior to the day of signing of a letter of intent. The indication of interest assumed no major business shifts or organization changes, revenue stability for the next two years and that Entropic had sufficient human resources, technology and intellectual property to support its current revenue. The indication of interest was subject to Entropic’s agreeing to three months of exclusivity in order for Company A to complete its due diligence. Although not addressed in the initial indication of interest, Entropic also ascertained that any transaction by Company A would include a voluntary filing with the Committee on Foreign Investment in the United States (CFIUS) which would potentially subject the transaction to substantial delays and uncertainty if CFIUS approval was made a condition to closing the transaction. Subsequent to the delivery of such initial indication of interest, Company A indicated to representatives of Entropic’s management team that it would require completion of the CFIUS review as a condition to closing.

On December 1, 2014, Mr. Pardun and Mr. Padval met in Palo Alto, California. During the meeting, Mr. Pardun discussed MaxLinear’s potential strategic interest in a combination of MaxLinear and Entropic. Mr. Padval indicated

 

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that Entropic’s board was open to considering a transaction but needed a proposal from MaxLinear to assess whether a transaction would be supported. Mr. Pardun indicated that MaxLinear needed additional financial information in order to make a proposal and noted that the consideration MaxLinear offered would reflect only a small premium to Entropic’s trading price. Mr. Pardun and Mr. Padval agreed that key members of MaxLinear’s and Entropic’s respective management teams should meet to address MaxLinear’s diligence questions.

Following the meeting between Mr. Pardun and Mr. Padval, members of MaxLinear and Entropic management discussed MaxLinear’s specific financial diligence requests in anticipation of another meeting between the companies.

On December 8, 2014, Dr. Tewksbury and Mr. Lyle and representatives of Barclays, on behalf of Entropic, met in person at the offices of WSGR, with Dr. Seendripu, Mr. Spice and representatives of Stifel, on behalf of MaxLinear, to address, among other topics, the financial diligence requests referenced above. After lengthy discussions, Dr. Tewksbury requested that if MaxLinear wished to proceed with discussions with Entropic, it would need to submit an offer in writing for Entropic’s board to consider.

On December 9, 2014, the board of directors of Entropic held a regular meeting. During the meeting, representatives of Barclays updated the board on the strategic review process, including activities to date and detailed background analyses on MaxLinear and Company A and the strategy for engaging with both parties. Lance Bridges, Entropic’s General Counsel, reviewed the fiduciary duties of the board in considering the proposals from Company A and any proposal from MaxLinear. The board discussed with the representatives of Barclays timing issues and risks associated with closing a potential transaction with these two parties and discussed the alternative of remaining a standalone company, including associated risks.

On December 15 and December 16, 2014, representatives of Entropic’s senior management and Barclays met in person with representatives of Company A in Menlo Park, California to discuss the terms of the non-binding indication submitted by Company A, Company A’s due diligence process and Entropic’s concerns about deal certainty with Company A considering Company A’s stated process, request for lengthy exclusivity and governmental approval requirements. Representatives of Barclays had requested that Company A hire U.S. financial and legal advisors to facilitate the discussion of a potential transaction before the meeting and reiterated that request during the meeting.

On December 15, 2014, MaxLinear’s board of directors held a special meeting in which Mr. Spice and representatives of Stifel also participated. Dr. Seendripu and Mr. Spice reviewed with the board the status of recent discussions with Entropic, including the discussion between Messrs. Pardun and Padval on December 1, 2015 and the additional financial diligence obtained during the December 9, 2014 meeting between Entropic and MaxLinear managements. Representatives of Stifel reviewed the financial aspects of a potential proposal to be made to Entropic, including a revenue projection provided by Entropic management for fiscal 2015 of $190 million (which was provided by Entropic along with a downside scenario reflecting estimated 2015 revenue equal to $165 million) and an EBITDA projection for Entropic in fiscal 2015 of $24 million (which was calculated based on non-GAAP operating income estimates provided by Entropic, and depreciation estimates of MaxLinear management, in consultation with Stifel). At that time, MaxLinear’s internal downside forecast estimated Entropic’s 2015 revenue and EBITDA to equal $162 million and $10 million, respectively. MaxLinear’s board and representatives of Stifel then discussed and approved a written proposal addressed to Mr. Padval as chairman of Entropic’s board on the terms outlined below.

On December 17, 2014, Entropic received an initial indication of interest from MaxLinear. Among other things, the initial indication from MaxLinear:

 

    Contemplated a purchase price of (i) $1.15 per share in cash and (ii) 0.1905 of a share of MaxLinear Class A common stock for each outstanding share of Entropic common stock (based on MaxLinear’s closing price on December 17, 2014, the purchase price was valued at approximately $2.60 per share of Entropic common stock);

 

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    Stated that MaxLinear would assume each outstanding and unexercised option, restricted stock unit and performance stock unit of Entropic, subject to adjustment based on purchase price;

 

    Was not subject to any financing contingency;

 

    Expressed a willingness to expand the MaxLinear board of directors to include one current Entropic director; and

 

    Included a 45 day exclusivity period.

On December 23, 2014, the Entropic Executive Committee met telephonically with representatives of Barclays and representatives of senior management to review and discuss MaxLinear’s initial written proposal. The representatives of Barclays reviewed the financial aspects of the proposal and discussed with the Executive Committee a potential counterproposal. Following that meeting, Entropic sent a letter to the board of directors of MaxLinear expressing an interest in continuing discussions and asking that MaxLinear increase the purchase price to (i) $1.15 per share and (ii) 0.277 of a share of MaxLinear Class A common stock for each outstanding share of Entropic common stock. Based on MaxLinear’s closing price on December 19, 2014, the proposal was valued at approximately $3.20 per share of Entropic common stock. In its response letter, Entropic’s board also expressed its view that in light of the relative economic ownership of the combined company, expanding the MaxLinear board of directors to provide for three Entropic directors would be a more appropriate representation. The board believed that having representation on MaxLinear’s board of directors after the acquisition was in the best interests of Entropic’s stockholders to establish continuity and provide oversight for the interests of the former Entropic stockholders in the combined entity. Entropic also stated in the response letter that it would consider a mutual exclusivity period to negotiate a definitive agreement but that such period would need to be significantly shorter than the proposed 45 day period outlined in the initial MaxLinear offer.

On December 30, 2014, MaxLinear’s board of directors held a special meeting. Mr. Spice and representatives of Stifel also participated. Representatives of Stifel reviewed with the board the financial and other terms of Entropic’s counterproposal relative to MaxLinear’s December 17, 2014 written proposal and the financial aspects of a proposed counterproposal. Following a discussion of a draft counterproposal, the board approved MaxLinear’s delivering to Entropic’s board the non-binding written proposal described below.

On December 31, 2014, in a letter sent to the board of directors of Entropic, MaxLinear agreed to increase the proposed purchase price to (i) $1.15 per share and (ii) 0.2200 of a share of MaxLinear Class A common stock for each outstanding share of Entropic common stock. Based on MaxLinear’s closing price on December 31, 2014, the purchase price was valued at approximately $2.78 per share of Entropic common stock. In addition, the purchase price was valued at approximately $2.82 and $2.78 per share of Entropic common stock using the MaxLinear closing prices on December 17, 2014 and December 19, 2014, respectively, which were the dates referenced in the initial MaxLinear proposal and Entropic’s counterproposal. The revised proposal assumed that outstanding performance stock units held by certain members of senior management would not vest and would be cancelled prior to close. The revised proposal also stated that MaxLinear was prepared to shorten the exclusivity period to 30 days but that MaxLinear believed its initial offer of including one Entropic director on the MaxLinear board of directors was appropriate. The letter further indicated that MaxLinear’s board was unwilling to engage in a lengthy and costly negotiation to resolve differences in purchase price expectations. It encouraged Entropic’s board to seriously consider the offer and requested a meeting of MaxLinear’s management with Dr. Tewksbury and Mr. Lyle to discuss the offer further.

On January 4, 2015, the Entropic Executive Committee met telephonically with Dr. Tewksbury and Mr. Lyle to review and discuss the revised proposal received from MaxLinear, and Dr. Tewksbury was given authority to engage again with MaxLinear to try to increase the offer price.

On January 7, 2015, Dr. Tewksbury and Dr. Seendripu met at the Consumer Electronics Show in Las Vegas and discussed the parties’ respective positions on price and the potential to reach an agreement between the

 

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parties’ then-current positions. The meeting concluded with Dr. Tewksbury’s agreeing to respond with a revised written proposal for Dr. Seendripu to take to the MaxLinear board of directors.

On January 8, 2015, Entropic sent a response letter to the board of directors of MaxLinear in which, after expressing that the announced restructuring of Entropic’s SoC business was already having positive impacts on Entropic’s performance and that Entropic’s financial performance would likely exceed prior public guidance for the first quarter of 2015, asked that the purchase price be increased to (i) $1.15 per share and (ii) 0.2396 of a share of MaxLinear Class A common stock for each outstanding share of Entropic common stock. Based on MaxLinear’s closing price on January 8, 2015, the purchase price was valued at approximately $3.00 per share of Entropic common stock. In the letter, Entropic noted that the performance stock units could potentially vest if the stock price performance of MaxLinear and Entropic were to appreciate significantly before closing. Entropic reiterated its prior position that, in light of the relative economic ownership in the combined company implied by the current proposals, the parties should continue to discuss the appropriate number of Entropic directors for MaxLinear’s board of directors following closing. Lastly, Entropic stated that it would consider a mutual exclusivity period but that such period would need to be substantially shorter than the 30 days proposed by MaxLinear.

On January 10, 2015, MaxLinear’s board of directors held a special meeting in which Mr. Spice and representatives of Stifel participated. Representatives of Stifel reviewed with the board Entropic’s January 8, 2015 counterproposal, discussed financial aspects of the proposed transaction, compared the current Entropic proposal with MaxLinear’s most recent and prior proposals, and updated Stifel’s financial analyses to reflect proposals regarding revised transaction terms. They also reviewed with the board a draft response letter to Entropic’s board providing for, among other matters, a revised purchase price. Following further discussions with management and representatives of Stifel, MaxLinear’s board approved the delivery of a revised written proposal as outlined below.

On January 10, 2015, the board of directors of Entropic received a revised proposal letter from MaxLinear in which MaxLinear agreed to increase the purchase price to (i) $1.20 per share and (ii) 0.2200 of a share of MaxLinear Class A common stock for each outstanding share of Entropic common stock. Based on MaxLinear’s closing price on January 9, 2015, the purchase price was valued at approximately $2.96 per share of Entropic common stock. The revised proposal assumed that the performance stock units would not vest and would be cancelled and that any cash used to cancel such awards would be deducted from the cash portion of the merger consideration. MaxLinear reiterated its position that one current Entropic director would join the MaxLinear board of directors and also agreed to shorten the proposed exclusivity period to 15 days with an automatic extension of 15 days should both parties confirm via email their intention to proceed with a transaction.

On January 11, 2015, the Entropic Executive Committee met to discuss the Company A proposal and the revised proposal from MaxLinear. All members of Entropic’s board of directors participated in this meeting of the Executive Committee, and representatives of Entropic’s senior management, Barclays, and Cooley also were present at the meeting. The representatives of Barclays first updated the board on its recent outreach to 17 prospective acquirers previously contacted to determine if any of them would have a renewed interest in a potential strategic transaction with Entropic. Based on such follow-up activities, the representatives of Barclays confirmed that the only parties interested in acquiring Entropic at such time were MaxLinear and Company A. Dr. Tewksbury and representatives of Barclays then updated the Executive Committee on the latest proposal and feedback from MaxLinear indicating that MaxLinear was not willing to further enhance its offer. MaxLinear also indicated that it was not willing to offer more than one board seat. The Executive Committee asked questions and discussed the MaxLinear proposal. Dr. Tewksbury and representatives of Barclays then discussed the most recent proposal from Company A, noting that the terms of the preliminary offer together with the prior interactions with Company A made Barclays and management question whether Company A had the experience and ability to complete negotiation of a definitive agreement and consummate an international transaction on the terms that Company A had proposed. In support of these concerns, representatives of Barclays and management noted that (i) the offer only included a range of possible purchase prices as opposed to the specific price that Company A was requested to submit, (ii) Company A had never completed any U.S. acquisitions, (iii) Company A had shown

 

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no indication of engaging outside financial or U.S. legal advisors, despite repeated requests to do so by representatives of Barclays, so that management could discuss potential deal risk and timing matters unique to Company A’s status as a Chinese buyer, and (iv) Company A was requiring a 90 day exclusivity period for confirmatory diligence. Additionally, Entropic’s management conveyed to the Entropic board of directors advice received from outside counsel indicating that if Company A made a voluntary filing under CFIUS as specified in its indication of interest, given Company A’s affiliation with the Chinese government and the absence of any prior CFIUS filings by Company A, there was a strong likelihood of an extensive and lengthy CFIUS investigation over many months with no guarantee of ultimate approval. Following a discussion of the risks and uncertainties of the Company A proposal in comparison to the offer from MaxLinear and Entropic’s strategic alternatives, the Executive Committee, with the concurrence of all of the directors, decided to continue moving forward with MaxLinear as the primary option but instructed Barclays to continue to work with Company A to determine whether Company A could improve significantly the deal certainty of its offer. The board, however, noted that the effort to improve the offer from Company A should not be done in a manner that jeopardized the offer from MaxLinear. Specifically, the board authorized management to suspend discussions with Company A and enter into an exclusivity agreement with MaxLinear based on the last price offered by MaxLinear if Company A’s offer could not be significantly improved within a short period of time or if a delay in reaching exclusivity with MaxLinear might put the offer from MaxLinear in jeopardy.

On January 12, 2015, Entropic received an updated indication of interest from Company A. Among other things, the initial indication from Company A:

 

    Contemplated a purchase price for Entropic of between $300 million and $330 million of equity value, assuming that Entropic’s revenue would be stable for the next two years;

 

    Indicated that 100% of the purchase price would be paid in cash and would be fully financed by Company A and its parent company and affiliates;

 

    Stated that Company A would file with CFIUS for its approval during the early stages of the proposed transaction;

 

    Indicated that Company A intended to keep current Entropic management and employees in place post-close; and

 

    Included a two month exclusivity period during which Company A would be allowed to conduct confirmatory diligence and Entropic would not be permitted to enter into discussions regarding an alternative transaction with another party.

Following receipt of the revised proposal from Company A, which management did not believe addressed the concerns discussed at the January 11, 2015 board meeting, on January 12, 2015, Entropic sent a letter to the board of directors of MaxLinear stating that the board of directors of Entropic found the January 10, 2015 offer from MaxLinear acceptable and that Entropic was prepared to proceed towards completing a transaction on those terms.

On January 13, 2015, Entropic’s data room was opened to WSGR, and a few days later, to employees of MaxLinear to enable MaxLinear to complete its confirmatory due diligence.

On January 14, 2015, representatives of WSGR provided Cooley with an initial draft of the exclusivity agreement providing for 15 days of exclusivity with an automatic 15 day extension if MaxLinear and Entropic confirmed in writing their intention to proceed with negotiating the proposed acquisition on the financial terms discussed by the parties.

On January 15, 2015, representatives of Cooley provided WSGR with proposed comments to the draft exclusivity agreement, including changes to shorten the exclusivity period to 15 days and making the obligations under the agreement mutual so that each party would be precluded from soliciting or discussing an alternative transaction during the pendency of the exclusivity period.

 

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On January 17, 2015, representatives of Barclays, on behalf of Entropic, had a phone call with representatives of Company A. The representatives of Barclays requested that Company A provide a revised offer with a single price rather than a range. During the call, Company A did not provide additional insight into the proposed price range beyond saying that the final price would depend on the results of confirmatory diligence. Company A indicated that its timetable to signing a definitive agreement was early March but that it would consider whether it was possible to accelerate its timetable.

On January 18, 2015, representatives of WSGR provided Cooley with an initial draft merger agreement, which draft included a no-solicitation clause subject to fiduciary exceptions, limitations on the right of either the Entropic board of directors or the MaxLinear board of directors to change its recommendation, a five business day match right, a right for each party to terminate the agreement in order to enter into a superior proposal, and a termination fee equal to 4.5% of the fully diluted equity value of Entropic at signing based on the deal price that would be payable by Entropic or MaxLinear upon certain specified circumstances (including upon termination to accept a superior proposal) and up to $3 million of expense reimbursement for each party in the event the other party terminated the merger agreement under certain specified circumstances. Additionally, the initial draft merger agreement specified that Dr. Tewksbury would serve as the one Entropic director on the MaxLinear board of directors following the closing.

On January 19, 2015, representatives of Barclays, at the request of Entropic, sent an email to Company A explaining that Entropic had entered into accelerated negotiations with another potential buyer and that Company A would need to agree to the following key terms in the next 24-36 hours in order for Entropic to continue discussions with Company A:

 

    Signing of a definitive agreement before February 19, 2015;

 

    No exclusivity period;

 

    Cash purchase price of $4.00 per share of Entropic common stock; and

 

    Reverse break-up fee of $50 million to be deposited with a neutral escrow agent and payable to Entropic in the event the transaction is terminated due to failure to secure CFIUS approval in a reasonable time after the definitive agreement was signed.

On January 20, 2015, representatives of Barclays, on behalf of Entropic, received an email from Company A stating that Company A could not make any commitment on the timeline provided given the need to first get approval from its stockholder, which would require additional time. In response to this message, representatives of Barclays responded to Company A explaining that given the circumstances, Entropic would be suspending its discussions and focusing on negotiating a merger agreement with another party.

On January 21, 2015, MaxLinear’s board of directors executed a unanimous written consent approving the exclusivity agreement between MaxLinear and Entropic.

On January 22, 2015, Entropic and MaxLinear signed the exclusivity agreement, which provided for, among other things, a reciprocal 15 day exclusivity period during which neither party could solicit or discuss an alternative transaction with a third party. Later that day, Cooley delivered, on behalf of Entropic, preliminary written comments on the draft merger agreement to WSGR, which comments reduced the termination fee payable by Entropic (but not the termination fee payable by MaxLinear) to 3.5% of the fully diluted equity value of Entropic at signing based on the deal price and provided for up to $2 million of expense reimbursement for each party in the event the other party terminated the merger agreement under specified circumstances.

On January 23, 2015, Entropic and Cooley were provided access to MaxLinear’s data room to enable Entropic to complete its confirmatory due diligence. Prior to that date, Entropic and Cooley had reviewed MaxLinear’s publicly-available documents filed with the SEC. In addition, during the meetings described above, Entropic employees and representatives of Barclays had opportunities to discuss MaxLinear’s business and financial projections with MaxLinear employees and representatives from Stifel.

 

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Between January 23, 2015 and February 1, 2015, Entropic and Cooley reviewed the documents in MaxLinear’s data room, and MaxLinear and WSGR reviewed the documents in Entropic’s data room. Each party also conducted interviews with representatives of the other and its outside counsel concerning such documents, any outstanding litigation (including, with respect to MaxLinear, outstanding intellectual property litigation), and compliance with certain laws applicable to the other party’s business.

Also on January 23, 2015, representatives of management of Entropic and MaxLinear held an all-day in-person meeting at WSGR’s offices to discuss due diligence with a focus on each company’s respective financial models. Additionally, in a separate break-out room, Mr. Bridges and representatives of Cooley, on behalf of Entropic, met with representatives of WSGR, on behalf of MaxLinear, to discuss the draft merger agreement. In discussions among the two management teams and counsel, MaxLinear indicated that, with respect to Entropic representation on MaxLinear’s board after the merger, it would only agree to appoint Dr. Tewksbury and another Entropic director who had indicated that he was not interested in serving.

On January 27, 2015, Dr. Tewksbury, Mr. Lyle, Mr. Bridges and representatives of Cooley met with Dr. Seendripu, Mr. Spice and representatives of WSGR at Cooley’s offices to discuss certain key issues in the draft merger agreement, including certain deal protection related provisions. At the conclusion of this meeting, management of the parties agreed to recommend that their respective boards approve a reciprocal termination fee equal to 4.0% of the fully diluted equity value of Entropic at signing based on the deal price and up to $2.5 million of expense reimbursement for each party in the event the other party terminated the merger agreement under specified circumstances. The parties also agreed to continue to discuss the conditions to closing and other deal protection issues.

Between January 28, 2015 and through the early morning of February 3, 2015, representatives of WSGR, Cooley, and Stifel as well as Mr. Bridges participated in various teleconferences and meetings at the offices of WSGR and exchanged revised drafts to negotiate the proposed merger agreement and related agreements, including the scope of certain representations and warranties and operating covenants as well as conditions to MaxLinear’s obligations to complete the merger. Members of Entropic and MaxLinear management and representatives of Stifel continued to conduct due diligence on each other during this period. During this period, members of the senior managements of Entropic and MaxLinear held meetings at the offices of WSGR to continue negotiations and conduct diligence. MaxLinear’s and Entropic’s respective managements and representatives of Stifel participated in portions of the meetings with representatives of WSGR and Cooley where conditions to closing and deal protection issues were discussed as well as in discussions of other material provisions of the proposed agreement.

On January 29, 2015, MaxLinear’s board of directors held a special meeting to consider the proposed merger agreement and related matters. Representatives of WSGR reviewed with the board matters relating to regulatory approvals arising from the acquisition and reviewed with the board its fiduciary obligations in considering the acquisition and the proposed merger agreement. In addition, representatives of WSGR reviewed with the board materials provided by Stifel at MaxLinear’s request concerning relationships between Stifel, on the one hand, and any of Entropic, its significant stockholders, members of its board of directors, and any company on whose board of directors a member of Entropic’s board may serve, on the other hand. Stifel’s materials noted that Stifel had not received any fees for investment banking services from Entropic since Entropic’s initial public offering in 2007. Based on Stifel’s representations, MaxLinear’s board requested that WSGR obtain additional information from Stifel to permit the board to make a final determination concerning their engagement. The board discussed whether any member of MaxLinear’s board had personal or business relationships with any member of Entropic’s board. The board discussed, without Mr. Schrock present, Mr. Schrock’s service with Mr. Padval on the board of directors of IDT and Dr. Tewksbury’s former service as the Chief Executive Officer of IDT. Following discussion, the directors present determined that these limited relationships did not create conflicts of interest with respect to Mr. Schrock’s participation in the consideration of and, if applicable, voting to approve a definitive merger agreement with Entropic. Mr. Schrock then rejoined the meeting, and representatives of WSGR led a discussion concerning consideration of a potential forum selection

 

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bylaw amendment. As the next matter, representatives of WSGR led a detailed discussion with the board of the draft definitive merger agreement, including, among other matters, discussions of the proposed transaction structure, proposed voting agreements, representations and warranties, operating covenants, non-solicitation provisions applying to both parties together with associated fiduciary carve-outs, termination rights, termination fees and the conditions under which they would become payable, regulatory approval requirements and covenants, and stockholder approval requirements. WSGR also identified and discussed with the board specific open terms and conditions being negotiated between MaxLinear and Entropic. Following these discussions, representatives of Stifel joined the meeting, and Mr. Spice made a presentation concerning the status and findings of MaxLinear’s management, financial, and legal due diligence activities.

On January 30, 2015, MaxLinear’s board of directors acted by unanimous written consent to approve the terms of MaxLinear’s engagement letter with Stifel, including a determination based on representations from Stifel that nothing had come to the board’s attention that caused it to believe that a material conflict of interest was likely to exist with respect to MaxLinear’s engagement of Stifel.

On February 1, 2015, MaxLinear’s board of directors held a special meeting at which Stifel reviewed the proposed acquisition from a financial point of view, including various analyses of its valuation methodologies and assumptions underlying these analyses and Stifel’s preliminary views of the fairness to MaxLinear from a financial point of view of the proposed consideration to be paid to the stockholders of Entropic. Mr. Spice also reviewed MaxLinear management’s sensitivity analyses performed around Entropic’s management forecasts and assumptions underlying these analyses. Following these discussions, MaxLinear’s board requested that Stifel perform an additional discounted cash flow analysis based on a downside risk scenario prepared by MaxLinear with respect to Entropic’s management base case financial projections (which projections reflected Entropic management’s outlook for revenue in 2015 of $180.4 million). Based on this new information and its assessment of market conditions, MaxLinear management had increased its internal downside forecast of Entropic’s 2015 revenue and EBITDA from the amounts presented to the MaxLinear board on December 15, 2014 of $162 million and $10 million, respectively, to $180.6 million and $18.1 million, respectively. Representatives of WSGR also discussed with the board the status of negotiations with respect to the proposed definitive merger agreement, including a discussion of developments with respect to outstanding negotiating points since the review provided on January 29, 2015.

On February 2, 2015, MaxLinear’s board of directors held a special meeting at which MaxLinear’s senior management, representatives of WSGR, and a representative of MaxLinear’s outside intellectual property counsel participated. The purpose of the meeting was to review legal and management diligence conducted since Entropic and MaxLinear began active discussions, and the meeting included separate presentations based on functional area concerning the scope and limitations of MaxLinear’s diligence. In addition, representatives of WSGR reviewed the status of negotiations on open issues, including in particular MaxLinear’s request that all performance stock units held by certain Entropic executives be terminated prior to the closing of the acquisition. Management noted that there was a low probability that Entropic would satisfy the stock price-based performance milestones under these awards and that they would likely expire unvested in connection with the acquisition.

On February 2, 2015, the board of directors of Entropic met to discuss the proposed transaction with MaxLinear. Representatives of Entropic’s management and legal and financial advisors also were present at the meeting. At this meeting, Entropic’s management and advisors provided an overview of the legal, financial and business diligence that had been conducted on MaxLinear. Dr. Tewksbury reviewed the expected strategic benefits of the combination, including the combined company’s comprehensive portfolio of RF/analog front end and connectivity solutions for the broadband cable, satellite and infrastructure markets, increased system level relevance to customers, enhanced scale to invest in a long-term product road map, and expected accelerated achievement of revenue growth and gross margin improvement targets. Entropic management reviewed the timeline for announcement of the proposed transaction with MaxLinear and anticipated related investor relations activities. Also at this meeting, representatives of Barclays reviewed with Entropic’s board of directors its

 

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valuation analysis of Entropic as a standalone business and MaxLinear as a standalone business and its analysis of the fairness of the proposed merger consideration. Cooley also reviewed the terms of the voting agreements that each of the directors and executive officers of Entropic and MaxLinear would be asked to sign in connection with the execution of the merger agreement and the circumstances under which the obligations under the voting agreement would terminate.

Negotiations of the terms and conditions of the merger agreement and related agreements were substantially concluded on the morning of February 3, 2015.

Later that morning on February 3, 2015, the board of directors of Entropic met to discuss the proposed transaction and the proposed merger agreement and to consider whether to recommend that Entropic’s stockholders adopt the merger agreement. Representatives of Entropic’s management and legal and financial advisors also were present at the meeting. At this meeting, representatives of Cooley discussed with the board of directors its fiduciary duties in connection with the proposed transaction and reviewed in detail the key terms of the draft merger agreement and related documents, including the reciprocal non-solicitation clauses subject to certain fiduciary carve-outs, the circumstances under which the board of directors of Entropic and MaxLinear can change their respective recommendations, the definition of superior proposal, the termination rights, the amount of the termination fee and the conditions under which a termination fee becomes payable, the stockholder approval requirements for Entropic and MaxLinear and the consequences of MaxLinear’s dual class of common stock in the event that MaxLinear receives a potential superior proposal, the regulatory approval requirements and covenants in the agreement and the asymmetry of certain representations and warranties and operating covenants in the draft merger agreement. Cooley also reviewed the voting agreements. Also at this meeting, representatives of Barclays presented its financial analysis of the proposed merger consideration and then rendered its oral opinion (which was subsequently confirmed in writing) to the board of directors of Entropic that, as of February 3, 2015 and based upon and subject to the qualifications, limitations and assumptions in its opinion, the merger consideration to be offered to the stockholders of Entropic (other than directors and executive officers of Entropic who are executing certain voting agreements in favor of MaxLinear in connection with the merger agreement) in the merger was fair, from a financial point of view, to such stockholders. After discussion, the Entropic board of directors unanimously (i) determined that the terms of the merger agreement were advisable and fair to, and in the best interests of, Entropic and its stockholders, (ii) approved the merger agreement and voting agreements, (iii) recommended that the Entropic stockholders vote in favor of the adoption of the merger agreement and (iv) authorized and approved certain other matters in connection with the execution and performance of the merger agreement, including certain regulatory filings.

In addition, MaxLinear’s board of directors also held a special meeting late in the morning on February 3, 2015 to discuss the proposed transaction and the proposed merger agreement and to consider whether to recommend that MaxLinear’s stockholders approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement. Representatives of Stifel and WSGR and Mr. Spice also were present at the meeting. As requested by the board at its February 1, 2015 meeting, representatives of Stifel made a presentation concerning a discounted cash flow analysis (which was not used for purposes of Stifel’s fairness opinion) based on a downside scenario prepared by MaxLinear’s management based on Entropic’s management base case forecast. Mr. Spice reviewed the various assumptions underlying the downside forecast, including changes in certain assumptions that had been discussed with the board since August 2014. Representatives of WSGR discussed with the board its fiduciary duties in connection with the proposed transaction and reviewed the key terms of the draft merger agreement and related documents, including providing an update with respect to the resolution of specific open issues identified and discussed from time to time since the January 29, 2015 meeting. At the meeting, representatives of Stifel also presented Stifel’s financial analysis of the proposed merger consideration and rendered Stifel’s oral opinion (which was subsequently confirmed in writing) to the board of directors of MaxLinear that, as of February 3, 2015 and based upon and subject to the qualifications, limitations and assumptions in Stifel’s opinion, the merger consideration to be paid to the stockholders of Entropic (other than with respect to certain excluded shares) in connection with the merger was fair, from a financial point of view, to MaxLinear. After discussion, MaxLinear’s board of directors unanimously (i) declared the advisability of and approved the merger agreement and the merger with Entropic and all other

 

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transactions contemplated thereby and authorized the execution of the merger agreement and the voting agreements, (ii) authorized preparation, filing and distribution of a registration statement, including a proxy statement, (iii) recommending the approval by the MaxLinear stockholders of the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement and soliciting such approval from MaxLinear’s stockholders, and (iv) authorized and approved certain other matters in connection with the execution and performance of the merger agreement, including certain regulatory filings.

On February 3, 2015, after the U.S. trading markets were closed, the merger agreement was executed by MaxLinear, Excalibur Acquisition Corporation, Excalibur Subsidiary, LLC and Entropic. In addition, certain of the directors and executive officers of MaxLinear entered into the voting agreements with Entropic, and each of the directors and executive officers of Entropic entered into the voting agreements with MaxLinear. For an additional discussion of the merger agreement and the voting agreements, see the sections entitled “The Merger Agreement” beginning on page 135 and “The Merger Agreement—Voting Agreements” beginning on page 158.

Shortly after the New York Stock Exchange and NASDAQ Global Market closed on February 3, 2015, Entropic issued its earnings release for the results of its fiscal year ended December 31, 2014 and updated its guidance for 2015. Separately, MaxLinear and Entropic issued a joint press release announcing the merger and the execution of the merger agreement, including that the implied total transaction value based on closing prices as of February 2, 2015 was approximately $287 million and the implied enterprise value was $181 million, net of Entropic’s cash balance as of December 31, 2014, and held a conference call to discuss the announced transaction.

On February 18, 2015, the parties filed a Premerger Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).

On February 26, 2015, the U.S. Federal Trade Commission (FTC) granted early termination of the waiting period under the HSR Act with respect to merger.

After the merger agreement was announced, MaxLinear and Entropic became aware that the financial projections prepared by MaxLinear and used by each of MaxLinear, Stifel, Entropic and Barclays in their financial analyses, including for purposes of calculating the projected unlevered free cash flow of MaxLinear for the years ended December 31, 2015, 2016 and 2017 contained certain errors. Such errors were the result of an incorrect formula in the spreadsheet used to calculate projected cash flows and did not arise from any errors or inaccuracies in the underlying data or assumptions used to calculate the projections, including assumptions with respect to revenue, gross margins or otherwise. See the sections of this joint proxy statement/prospectus captioned “Certain Unaudited Prospective Financial Information Reviewed by Entropic’s Board of Directors and Entropic’s Financial Advisorand “Certain Unaudited Prospective Financial Information Reviewed by MaxLinear’s Board of Directors and MaxLinear’s Financial Advisor” for the corrected financial projections of MaxLinear. Following such discovery, MaxLinear’s management provided the corrected financial projections to its board of directors and representatives of Stifel and to Entropic and representatives of Barclays.

At MaxLinear’s request, Stifel considered the analyses, including the discounted cash flow analysis, performed by Stifel in rendering its opinion to MaxLinear’s board of directors in light of the corrected financial projections of MaxLinear. On March 10, 2015, the board of directors of MaxLinear held a special meeting with representatives of Stifel and WSGR in attendance. At the special meeting, MaxLinear’s management summarized the errors contained in MaxLinear’s financial projections. Also at the special meeting, representatives of Stifel reviewed with MaxLinear’s board of directors the results of these analyses based on the corrected financial projections of MaxLinear. Following such review, the representatives of Stifel confirmed to MaxLinear’s board of directors that, based upon market, economic and other conditions as they existed on, and could be evaluated as of, the date and time of delivery of Stifel’s opinion on February 3, 2015, Stifel was of the view that consideration of the corrected financial projections of MaxLinear would not have changed the conclusion set forth in, or altered in any material respect the results of the analyses performed by, Stifel in rendering its opinion as of the date it was delivered. Following such discussion, MaxLinear’s board of directors determined that such errors in the MaxLinear financial projections were not material and would not have changed the board’s decision to approve the merger agreement

 

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and its recommendation that MaxLinear’s stockholders approve the issuance of shares of MaxLinear’s Class A common stock in the merger pursuant to the terms of the merger agreement.

At Entropic’s request, Barclays considered the analyses, including the discounted cash flow analysis, performed by Barclays in rendering its opinion in light of the corrected financial projections of MaxLinear. At a meeting of Entropic’s board of directors on March 10, 2015, representatives of Barclays reviewed with Entropic’s board of directors, Mr. Bridges and representatives of Cooley the results of this analysis based on the corrected financial projections of MaxLinear. Based on the same assumptions used by Barclay’s in rendering its opinion on February 3, 2015, this analysis (i) implied a range of value per share of MaxLinear Class A common stock of $9.30 to $17.52 based on the standalone discounted cash flow analysis of MaxLinear (which range, as originally set forth in financial analysis presented by representatives of Barclays to the Entropic board of directors on February 3, 2015, was $10.12 to $19.30), (ii) implied an exchange ratio range of MaxLinear Class A common stock per share of Entropic common stock of 0.0862x to 0.1293x based on the exchange ratio discounted cash flow analysis (which range, as originally set forth in the financial analysis presented by representatives of Barclays to the Entropic board of directors on February 3, 2015, was 0.0790x to 0.1185x), (iii) implied a range of value per share of MaxLinear Class A common stock based on the standalone comparable companies analysis of MaxLinear using its calendar year 2016 estimated EBITDA of $8.42 to $10.76 (which range, as originally set forth in the financial analyses presented by representatives of Barclays to the Entropic board of directors on February 3, 2015, was $8.47 to $10.83) and (iv) implied an exchange ratio range of MaxLinear Class A common stock per share of Entropic common stock of 0.0653x to 0.0979x based on the exchange ratio comparable companies analysis using MaxLinear’s calendar year 2016 estimated EBITDA (which range, as originally set forth in the financial analyses presented by representatives of Barclays to the Entropic board of directors on February 3, 2015, was 0.0649x to 0.0973x). The representatives of Barclays confirmed to Entropic’s board of directors that, based upon market, economic and other conditions as they existed on, and could be evaluated as of, the date and time of delivery of Barclays’ opinion on February 3, 2015, Barclays was of the view that consideration of the corrected financial projections of MaxLinear would not have changed the conclusion set forth in, or altered in any material respect the results of the analyses performed by Barclays in rendering, its opinion as of the date it was delivered. Following such discussion, Entropic’s board was provided with an opportunity to ask questions of the representatives of Barclays and no concerns or objections regarding the revised analyses were raised by the board. The board concluded the meeting by discussing with Mr. Bridges the expected timing to completion of the merger.

MaxLinear Board of Directors’ Recommendation and Reasons for the Merger

At a special meeting held on February 3, 2015, among other things, the MaxLinear board of directors unanimously:

 

    determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are advisable and in the best interests of MaxLinear’s stockholders;

 

    approved and adopted the merger agreement and directed the officers of MaxLinear to execute and deliver the merger agreement for and on behalf of MaxLinear;

 

    authorized and directed the officers of MaxLinear, for and on behalf of MaxLinear, to take all actions necessary to list the shares of MaxLinear Class A common stock to be issued in the merger pursuant to the terms of the merger agreement on the New York Stock Exchange in order to proceed with the merger and the other transactions contemplated by the merger agreement; and

 

    resolved to recommend that the stockholders of MaxLinear approve the issuance of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement.

In evaluating the merger agreement, the merger, and the other transactions contemplated by the merger agreement and reaching its decision to recommend that the MaxLinear stockholders approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement, MaxLinear’s board considered the financial performance and condition, business operations and prospects of

 

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each of MaxLinear and Entropic on a standalone basis, and MaxLinear following completion of the acquisition, the terms and conditions of the merger agreement and the ancillary documents, the results of the due diligence investigation conducted by MaxLinear’s management, accountants and legal counsel, and the analysis of MaxLinear’s legal and financial advisors.

MaxLinear’s board also considered a number of potential benefits of the acquisition, including those listed below:

 

    the acquisition of Entropic is expected to add significant scale to MaxLinear’s analog/mixed-signal business, expanding its addressable market and enhancing the strategic value of MaxLinear’s offerings to its broadband and access partners, OEM customers, and service providers, including expected cross-selling opportunities and longer-term platform integration opportunities with Entropic’s MoCA technology;

 

    the acquisition of Entropic is expected to add scale and customer relationships in the satellite Pay-TV and broadband access markets;

 

    the acquisition of Entropic is expected to strengthen, and be complementary to, MaxLinear’s intellectual property position with the addition of Entropic’s extensive patent portfolio;

 

    the acquisition of Entropic is expected to increase efficiency and achieve operating synergies in excess of $20 million in the first full calendar year post-completion of the acquisition, enabled by efficiencies across its research and development and selling, general and administrative activities, including cost reductions enabled by the elimination of redundant overhead expenses and public company costs;

 

    the acquisition of Entropic is expected to be accretive to MaxLinear’s earnings per share, excluding upfront non-recurring charges, transaction related expenses, and the amortization of purchased intangible assets;

 

    the expectation that MaxLinear stockholders, immediately after completion of the merger, would hold approximately 65% of the outstanding shares of MaxLinear’s Class A common stock; and

 

    the opinion, dated February 3, 2015, of Stifel to the Maxlinear board of directors as to the fairness, from a financial point of view and as of the date of the opinion, to MaxLinear of the merger consideration to be paid by MaxLinear to the holders of Entropic common stock transaction, which opinion was based upon and subject to the assumptions made, procedures followed, factors considered and limitations on the review undertaken, as more fully described under “The Merger—Opinion of MaxLinear’s Financial Advisor” and the related financial analyses presented by Stifel to the MaxLinear board of directors.

MaxLinear’s board also considered a number of uncertainties, risks and other potentially negative factors, including those listed below:

 

    the risk that MaxLinear’s assumptions underlying its expectations and guidance of the financial impact of the acquisition, including, future revenues or revenue growth rates, if any, of Entropic and anticipated cost savings from the acquisition of Entropic, are not accurate;

 

    the risk that the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than expected as a result of challenges MaxLinear might face in integrating the two companies’ technology, personnel and operations;

 

    the risk of disruption to MaxLinear’s and/or Entropic’s business relationships, including customer relationships, during the pendency of the acquisition;

 

    the risk that MaxLinear and Entropic may not be able to continue to retain and motivate executive and other key employees during the pendency of the acquisition, or, in the case of MaxLinear, following completion of the acquisition;

 

    the risk that, if either Maxlinear’s or Entropic’s stockholders do not approve the merger and the proposed acquisition is not completed, MaxLinear will have incurred substantial costs, MaxLinear’s management will have devoted substantial time and resources to the acquisition, and MaxLinear may experience negative reactions from the financial markets or its suppliers, customers or employees;

 

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    the risk that the regulatory approvals may impose conditions on, jeopardize or delay completion of the merger transaction or reduce the anticipated benefits of the acquisition; and

 

    various other risks associated with the combined organization and the acquisition, including the risks described in the section entitled “Risk Factors” in this joint proxy statement/prospectus.

The MaxLinear board unanimously recommends that MaxLinear stockholders vote “FOR” the proposal to approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement.

The foregoing discussion of the MaxLinear board of directors’ reasons for its recommendation to approve the issuance of shares of Maxlinear Class A common stock in the merger pursuant to the terms of the merger agreement and the foregoing list of factors considered by the MaxLinear board are not meant to be exhaustive, but address the material information and factors considered by the MaxLinear board of directors in consideration of its recommendation. In view of the variety and complexity of factors and information considered, the MaxLinear board of directors did not find it practicable to, and did not, make specific assessments of, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. Rather, the directors made their determination and recommendation after consideration of all of the factors as a whole. In addition, individual members of MaxLinear’s board of directors may have given different weight to different factors. The MaxLinear board of directors conducted an overall analysis of the factors described above, including thorough discussions with, and questioning of, MaxLinear management and legal and financial advisors, and considered the factors overall to be favorable to, and to support, its determination and recommendation.

Opinion of MaxLinear’s Financial Advisor

The MaxLinear board requested Stifel’s opinion (the “Opinion”), as investment bankers, as to the fairness, from a financial point of view, to MaxLinear of the merger consideration to be paid by MaxLinear to the holders of Entropic common stock (other than (i) any shares of Entropic common stock owned by MaxLinear or any subsidiary of MaxLinear or Entropic or held in treasury of Entropic and (ii) any shares of Entropic common stock issued and outstanding immediately prior to the effective time of the merger held by an Entropic stockholder who has sought appraisal for such shares in accordance with applicable Delaware law and the merger agreement) (for purposes of the disclosure in this joint proxy statement/prospectus concerning “The Opinion of MaxLinear’s Financial Advisor”, the “Merger Shares”) in the merger pursuant to the merger agreement. On February 3, 2015, Stifel delivered to the MaxLinear board its written opinion that, as of the date of the Opinion and subject to and based on the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications contained in such Opinion, the merger consideration to be paid by MaxLinear to the holders of Merger Shares in the merger pursuant to the merger agreement was fair to MaxLinear, from a financial point of view.

The MaxLinear board did not impose any limitations on Stifel with respect to the investigations made or procedures followed in rendering its Opinion. In selecting Stifel, the MaxLinear board considered, among other things, the fact that Stifel is a reputable investment banking firm with substantial experience advising companies in the technology sector, in providing strategic advisory services in general, and Stifel’s familiarity with MaxLinear and its business. Stifel, as part of its investment banking services, is regularly engaged in the independent valuation of businesses and securities in connection with mergers, acquisitions, underwritings, sales and distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes.

The full text of the Opinion is attached to this joint proxy statement/prospectus as Annex B and is incorporated herein by reference. The summary of the Opinion contained in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the Opinion. MaxLinear stockholders are encouraged to read the Opinion carefully and in its entirety for a discussion of the procedures followed, assumptions made, other matters considered and limits of the review undertaken by Stifel in connection with the Opinion.

 

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In rendering the Opinion, Stifel, among other things:

(i) discussed the merger and the subsequent merger and related matters with MaxLinear’s counsel and reviewed a draft copy of the merger agreement dated February 2, 2015;

(ii) reviewed the audited consolidated financial statements of MaxLinear contained in its Annual Reports on Form 10-K for the three years ended December 31, 2013 and unaudited consolidated financial statements of MaxLinear contained in its Quarterly Report on Form 10-Q for the quarter and nine months ended September 30, 2014;

(iii) reviewed the audited consolidated financial statements of Entropic contained in its Annual Reports on Form 10-K for the three years ended December 31, 2013 and the unaudited consolidated financial statements of Entropic contained in its Quarterly Report on Form 10-Q for the quarter and nine months ended September 30, 2014;

(iv) reviewed and discussed with MaxLinear’s management certain other publicly available information concerning MaxLinear and Entropic;

(v) held discussions with MaxLinear’s senior management, including estimates of certain cost savings, operating synergies, merger charges and the pro forma financial impact of the merger and the subsequent merger on MaxLinear;

(vi) reviewed certain non-publicly available information concerning MaxLinear, including internal financial analyses and forecasts prepared by its management and held discussion with MaxLinear’s senior management regarding recent developments;

(vii) reviewed certain non-publicly available information concerning Entropic, including internal financial analyses and forecasts prepared by its management and held discussion with Entropic’s senior management regarding recent developments;

(viii) reviewed and analyzed certain publicly available information concerning the terms of selected merger and acquisition transactions that Stifel considered relevant to its analysis;

(ix) reviewed and analyzed certain publicly available financial and stock market data relating to selected public companies that Stifel deemed relevant to its analysis;

(x) participated in certain discussions and negotiations between representatives of MaxLinear and Entropic;

(xi) reviewed the reported prices and trading activity of the equity securities of each of MaxLinear and Entropic;

(xii) conducted such other financial studies, analyses and investigations and considered such other information as Stifel deemed necessary or appropriate for purposes of the Opinion; and

(xiii) took into account Stifel’s assessment of general economic, market and financial conditions and Stifel’s experience in other transactions, as well as its experience in securities valuations and its knowledge of MaxLinear’s industry generally.

In rendering the Opinion, Stifel relied upon and assumed, without independent verification, the accuracy and completeness of all of the financial and other information that was provided to Stifel by or on behalf of MaxLinear or Entropic, or that was otherwise reviewed by Stifel, and did not assume any responsibility for independently verifying any of such information. With respect to the financial forecasts supplied to Stifel by MaxLinear and Entropic (including, without limitation, potential cost savings and operating synergies realized by a potential acquirer), Stifel assumed, at the direction of MaxLinear, that they were reasonably prepared on the basis reflecting the best currently available estimates and judgments of the management of MaxLinear and Entropic, as applicable, as to the future operating and financial performance of MaxLinear and Entropic, as applicable, and that they provided a reasonable basis upon which Stifel could form its opinion. The Opinion

 

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states that such forecasts and projections were not prepared with the expectation of public disclosure, that all such projected financial information is based on numerous variables and assumptions that are inherently uncertain, including, without limitation, factors related to general economic and competitive conditions and that, accordingly, actual results could vary significantly from those set forth in such projected financial information. Stifel relied on this projected information without independent verification or analyses and did not in any respect assume any responsibility for the accuracy or completeness thereof.

Stifel also assumed that there were no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of either MaxLinear or Entropic since the date of the last financial statements of each company made available to Stifel. Stifel did not make or obtain any independent evaluation, appraisal or physical inspection of either MaxLinear’s or Entropic’s assets or liabilities, the collateral securing any of such assets or liabilities, or the collectability of any such assets nor did Stifel review loan or credit files of MaxLinear or Entropic, nor has Stifel been furnished with any such evaluation or appraisal. The Opinion states that estimates of values of companies and assets do not purport to be appraisals or necessarily reflect the prices at which companies or assets may actually be sold and that because such estimates are inherently subject to uncertainty, Stifel assumes no responsibility for their accuracy.

Stifel assumed, with the consent of the MaxLinear board, that there are no factors that would delay or subject to any adverse conditions any necessary regulatory or governmental approval and that all conditions to the merger and the subsequent merger will be satisfied and not waived. In addition, Stifel assumed that the definitive merger agreement would not differ materially from the draft Stifel reviewed. Stifel also assumed that the merger and the subsequent merger will be consummated substantially on the terms and conditions described in the merger agreement, without any waiver of material terms or conditions by MaxLinear or any other party and without any anti-dilution or other adjustment to the merger consideration, and that obtaining any necessary regulatory approvals or satisfying any other conditions for consummation of the merger and the subsequent merger will not have an adverse effect on MaxLinear, Entropic or the merger or the subsequent merger. Stifel assumed that the merger and the subsequent merger will be consummated in a manner that complies with the applicable provisions of the Securities Act, the Exchange Act, and all other applicable federal and state statutes, rules and regulations. Stifel further assumed that MaxLinear relied upon the advice of its counsel, independent accountants, and other advisors (other than Stifel) as to all legal, financial reporting, tax, accounting, and regulatory matters with respect to MaxLinear, the merger and the subsequent merger, and the merger agreement.

Stifel’s Opinion was limited to whether the merger consideration to be paid by MaxLinear to the holders of Merger Shares in the merger pursuant to the merger agreement was fair to MaxLinear, from a financial point of view, as of the date of the Opinion, and it did not address any other terms, aspects or implications of the merger or the subsequent merger including, without limitation, the form or structure of the merger or the subsequent merger, any consequences of the merger or the subsequent merger on any party to the merger or the subsequent merger, their stockholders, creditors or otherwise, or any terms, aspects or implications of any voting, support, stockholder or other agreements, arrangements or understandings contemplated or entered into in connection with the merger or the subsequent merger or otherwise. Stifel’s Opinion also does not consider, address or include: (i) any other strategic alternatives then (or which were or may be) contemplated by the MaxLinear board or MaxLinear; (ii) the legal, tax or accounting consequences of the merger or the subsequent merger on MaxLinear or the stockholders of MaxLinear or on the stockholders of Entropic, including, without limitation, whether or not the merger or the subsequent merger will qualify as a tax-free reorganization pursuant to Section 368 of the Internal Revenue Code; (iii) the fairness of the amount or nature of any compensation to any of the officers, directors or employees of any party to the merger or the subsequent merger, or class of such persons, relative to the merger consideration or otherwise; (iv) the effect of the merger and the subsequent merger on, or the fairness of the consideration to be received by, holders of any class of securities of Entropic, or any class of securities of any other party to any transaction contemplated by the merger agreement; or (v) whether MaxLinear has sufficient cash, available lines of credit or other sources of funds to enable it to pay the cash consideration component of the merger consideration to the holders of Merger Shares at the closing of the merger. Furthermore, Stifel did not express any opinion as to what the value of the Class A common stock of

 

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MaxLinear will actually be when issued or the prices, trading range or volume at which MaxLinear’s or Entropic’s securities would trade following public announcement or consummation of the merger and the subsequent merger.

Stifel’s Opinion was necessarily based on economic, market, financial and other conditions as they existed, and on the information made available to Stifel by or on behalf of MaxLinear, Entropic or their advisors, or information otherwise reviewed by Stifel, as of the date of the Opinion. The Opinion states that subsequent developments may affect the conclusion reached in the Opinion and that Stifel does not have any obligation to update, revise, or reaffirm the Opinion.

Stifel’s Opinion was approved by Stifel’s fairness committee. Stifel’s Opinion was for the information of, and directed to, the MaxLinear board for its information and assistance in connection with its consideration of the financial terms of the merger and the subsequent merger. Stifel’s Opinion does not constitute a recommendation to the MaxLinear board as to how the MaxLinear board should vote on the merger and the subsequent merger or to any stockholder of MaxLinear or Entropic as to how any such stockholder should vote at any stockholders’ meeting at which the merger or the subsequent merger is considered, or whether or not any stockholder of MaxLinear or Entropic should enter into a voting, stockholders’, or affiliates’ agreement with respect to the merger or the subsequent merger, or exercise any dissenters’ or appraisal rights that may be available to such stockholder. In addition, the Opinion does not compare the relative merits of the merger and the subsequent merger with any other alternative transactions or business strategies which may have been available to MaxLinear and does not address the underlying business decision of the MaxLinear board or MaxLinear to proceed with or effect the merger and the subsequent merger. Stifel was not requested to, and Stifel did not, explore alternatives to the merger and the subsequent merger or solicit the interest of any other parties in pursuing transactions with MaxLinear.

The following represents a summary of the material financial analyses performed by Stifel in connection with the Opinion. Some of the summaries of financial analyses performed by Stifel include information presented in tabular format. In order to fully understand the financial analyses performed by Stifel, you should read the tables together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the information set forth in the tables without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by Stifel.

Except as otherwise noted, the information utilized by Stifel in its analyses, to the extent that it was based on market data, is based on market data as it existed on or before February 2, 2015 and is not necessarily indicative of current market conditions. The analyses described below do not purport to be indicative of actual future results, or to reflect the prices at which any securities may trade in the public markets, which may vary depending upon various factors, including changes in interest rates, dividend rates, market conditions, economic conditions and other factors that influence the price of securities.

For purposes of the financial analyses summarized below, the term “merger consideration” refers to $3.01 per share calculated as (i) cash consideration of $1.20 per Merger Share and (ii) stock consideration of $1.81 per Merger Share based on an exchange ratio of 0.2200 of a share of MaxLinear’s Class A common stock for each Merger Share and Maxlinear’s February 2, 2015 closing stock price of $8.24 per share.

Selected Public Companies Analysis

Entropic

Stifel compared Entropic, from a financial point of view, to 10 publicly traded semiconductor companies that Stifel deemed to be relevant based on their business profiles and financial metrics including product portfolios, end-markets, customers, size, growth, and profitability, among others. Stifel compared Entropic’s unaudited, preliminary calendar year 2014 and estimated calendar year 2015 financial metrics, as provided by Entropic’s management, to estimated (or, to the extent available, preliminary unaudited or audited results)

 

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calendar year 2014 and estimated calendar year 2015 financial metrics, obtained from available public sources, of the 10 selected semiconductor companies. Stifel believes that the group of companies listed below have business models similar to those of Entropic, but noted that none of these companies has the same management, composition, size, operations, financial profile, or combination of businesses as Entropic:

 

    Ali Corporation

 

    Broadcom Corporation

 

    Exar Corporation

 

    Inphi Corporation

 

    M/A-COM Technologies Solutions Holdings, Inc.

 

    Parade Technologies, Ltd.

 

    Sigma Designs, Inc.

 

    Silicon Image, Inc.*

 

    Silicon Laboratories, Inc.

 

    Vixs Systems Inc.

 

* Valuation multiples based on stock price as of January 26, 2015, the day prior to the announced sale to Lattice Semiconductor Corporation

Based on this information, Stifel calculated and compared the following multiples for Entropic and the selected comparable companies:

 

    Multiples of enterprise value (“EV”), which Stifel defined as fully-diluted equity value using the treasury stock method, plus debt, preferred stock and minority interests, less cash and cash equivalents, to estimated calendar year 2014 and 2015 (i) revenues (“EV/Revenues”) and (ii) adjusted earnings before one-time charges, interest, taxes, stock-based compensation and depreciation and amortization (“EV/ EBITDA”).

The following table sets forth the multiples indicated by this analysis. The range of multiples relative to the selected semiconductor companies reflects the first quartile to median metrics of such companies as of February 2, 2015:

 

Multiple:

   1st Quartile      Median      Mean      3rd Quartile      Range of
Multiples
Utilized in the
Analysis
     Proposed
Transaction
 

CY 2014 EV/Revenues

     1.1x         2.5x         2.3x         3.1x         1.1x – 2.5x         1.0x   

CY 2015 EV/Revenues

     0.9x         2.3x         2.1x         2.7x         0.9x – 2.3x         1.0x   

CY 2014 EV/EBITDA

     10.0x         11.7x         12.6x         15.4x         10.0x –11.7x         N.M.  (1) 

CY 2015 EV/EBITDA

     11.3x         12.3x         12.8x         14.8x         11.3x – 12.3x         10.5x   

 

(1) “N.M.” stands for “Not Meaningful”; no multiple could be calculated because Entropic was not profitable in 2014.

This analysis resulted in the following ranges of implied equity value per share of Entropic common stock:

 

Benchmark

   Range of Implied Equity
Values per Share
 

Revenue Multiples

   $ 3.09-5.65   

EBITDA Multiples

   $ 3.16-3.33   

 

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No company utilized in the selected company analysis is identical to Entropic. In evaluating the selected companies, Stifel made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions, and other matters, many of which are beyond Entropic’s control, such as the impact of competition on its business and the industry generally, industry growth and the absence of any adverse material change in Entropic’s financial condition and prospects or the industry or in the financial markets in general. Mathematical analysis (such as determining the mean or median) is not in itself a meaningful method of using peer group data.

MaxLinear

Stifel compared MaxLinear, from a financial point of view, to 10 publicly traded semiconductor companies that Stifel deemed to be relevant based on their business profiles and financial metrics including product portfolios, end-markets, customers, size, growth, and profitability, among others. Stifel compared MaxLinear’s unaudited, preliminary calendar year 2014 and estimated calendar year 2015 financial metrics, as provided by MaxLinear’s management, to estimated (or, to the extent available, preliminary unaudited or audited results) calendar year 2014 and estimated calendar year 2015 financial metrics, obtained from available public sources, of the 10 selected semiconductor companies. Stifel believes that the group of companies listed below have business models similar to those of MaxLinear, but noted that none of these companies have the same management, composition, size, operations, financial profile, or combination of businesses as MaxLinear:

 

    Ali Corporation

 

    Broadcom Corporation

 

    Exar Corporation

 

    Inphi Corporation

 

    M/A-COM Technologies Solutions Holdings, Inc.

 

    Parade Technologies, Ltd.

 

    Sigma Designs, Inc.

 

    Silicon Image, Inc.*

 

    Silicon Laboratories, Inc.

 

    Vixs Systems Inc.

 

* Valuation multiples based on stock price as of January 26, 2015, the day prior to the announced sale to Lattice Semiconductor Corporation

The following table sets forth the multiples indicated by this analysis. The range of multiples relative to the selected semiconductor companies reflects the first quartile to third quartile metrics of such companies as of February 2, 2015:

 

Multiple:

   1st Quartile      Median      Mean      3rd Quartile      Range of
Multiples
Utilized in the
Analysis
     Implied by
MaxLinear’s
Closing
Stock Price
of $8.24 as of
February 2,
2015
 

CY 2014 EV/Revenues

     1.1x         2.5x         2.3x         3.1x         1.1x – 3.1x         2.0x   

CY 2015 EV/Revenues

     0.9x         2.3x         2.1x         2.7x         0.9x – 2.7x         1.8x   

CY 2014 EV/EBITDA

     10.0x         11.7x         12.6x         15.4x         10.0x –15.4x         15.4x   

CY 2015 EV/EBITDA

     11.3x         12.3x         12.8x         14.8x         11.3x – 14.8x         11.9x   

 

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This analysis resulted in the following ranges of implied equity value per share of MaxLinear Class A common stock:

 

Benchmark

   Range of Implied Equity
Values per Share
 

Revenue Multiples

   $ 5.34-11.39   

EBITDA Multiples

   $ 7.02-8.99   

No company utilized in the selected company analysis is identical to MaxLinear. In evaluating the selected companies, Stifel made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions, and other matters, many of which are beyond MaxLinear’s control, such as the impact of competition on its business and the industry generally, industry growth and the absence of any adverse material change in MaxLinear’s financial condition and prospects or the industry or in the financial markets in general. Mathematical analysis (such as determining the mean or median) is not in itself a meaningful method of using peer group data.

 

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Selected Transactions Analysis

Based on public information available to Stifel, Stifel calculated and compared the multiples of EV to last twelve month (“LTM”) and next twelve month (“NTM”) revenues and LTM and NTM EBITDA implied in the merger for Entropic to the corresponding multiples implied in the following 21 precedent transactions involving semiconductor companies:

 

Announcement Date

 

Acquirer

 

Target

  EV / LTM   EV / LTM
      Revenue   EBITDA   Revenue   EBITDA
1/27/15   Lattice Semiconductor Corporation   Silicon Image, Inc.   1.8x   12.8   2.0x   19.5x
7/30/14   Inphi Corporation   Cortina Systems, Inc.   1.6x   N.A.(2)   N.A.   N.A.
3/10/14   Shanghai Pudong Science and Technology Investment Co., Ltd.   Montage Technology Group Limited   4.4x   13.3x   3.6x   11.2x
11/12/13   Tsinghua Unigroup Ltd.   RDA Microelectronics, Inc.   1.9x   12.7x   1.8x   13.8x
11/5/13   M/A-COM Technology Solutions Holdings Inc.   Mindspeed Technologies, Inc.   2.0x   9.1x   2.3x   9.4x
6/22/12   MediaTek Inc.   MStar Semiconductor, Inc.   2.4x   10.9x   2.0x   8.9x
5/2/12   Microchip Technology, Inc.   Standard Microsystems Corporation   1.9x   11.0x   1.8x   11.1x
3/21/12   Sigma Designs, Inc.   Trident Microsystems, Inc. DTV Product Line   0.2x   N.M.(1)   0.4x   N.A.
1/3/12   Entropic Communications, Inc.   Trident Microsystems, Inc. Set Top Box Bus.   0.5x   N.M.   N.A.   N.A.
9/7/11   QUALCOMM Incorporated   Integrated Device Technology, Inc. Video Processing Technology   N.A   N.A.   N.A.   N.A.
6/16/11   CSR plc   Zoran Corporation   0.7x   N.M.   0.7x   N.M.
3/16/11   MediaTek Inc.   Ralink Technology Corp.   1.6x   12.9x   1.2x   11.5x
2/23/11   Golden Gate Capital Corp.   Conexant Systems Inc.   1.3x   6.8x   1.4x   8.5x
1/3/11   QUALCOMM Incorporated   Atheros Communications Inc.   3.5x   15.2x   3.3x   18.8x
9/8/10   Zoran Corporation   Microtune, Inc.   1.0x   N.M.   0.8x   16.2x
3/22/10   Intersil Corp.   Techwell Inc.   5.3x   26.5x   3.8x   14.4x
10/5/09   Trident Microsystems, Inc.   NXP Semiconductors NV TV and Set Top Business   0.4x   N.A.   N.A.   N.A.
9/8/09   Atheros Communications Inc.   Intellon Corp.   2.4x   N.M.   2.0x   18.4x
8/25/08   Broadcom Corporation   Advanced Micro Devices, Inc. Digital TV Business   1.0x   N.A.   0.9x   N.A.
4/29/08   NXP Semiconductors NV   Conexant Systems Inc. Broadband Media Business   0.8x   N.A.   0.5x   N.A.
12/11/07   STMicroelectronics NV   Genesis Microchip Inc.   0.8x   N.M.   0.7x   N.A.

 

(1) “N.M.” stands for “Not Meaningful”.
(2) “N.A.” stands for “Not Available”.

 

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The following table sets forth the multiples indicated by this analysis and the multiples implied by the merger. The range of multiples reflects the first quartile to median metrics of the precedent transactions:

 

Multiple:

   1st
Quartile
     Median      Mean      3rd
Quartile
     Range of
Multiples
Utilized in the
Analysis
     Proposed
Transaction
 

LTM EV/Revenues

     0.8x         1.6x         1.8x         2.1x         0.8x – 1.6x         1.0x   

NTM EV/Revenues

     0.8x         1.8x         1.7x         2.0x         0.8x – 1.8x         1.0x   

LTM EV/EBITDA

     10.9x         12.7x         13.1x         13.2x         10.9x – 12.7x         N.M. (1) 

NTM EV/EBITDA

     10.6x         12.7x         13.5x         16.8x         10.6x – 12.7x         10.5x   

 

(1) “N.M.” stands for “Not Meaningful”; no multiple could be calculated because Entropic was not profitable in 2014.

Based on its review of the precedent transactions, Stifel applied selected multiples to the corresponding LTM and NTM revenues and EBITDA of Entropic, in each case as provided by Entropic’s management.

This analysis resulted in the following ranges of implied equity values per share of Entropic common stock:

 

Benchmark

   Range of Implied Equity
Values per Share
 

Revenue Multiples

   $ 2.67 – 4.35   

EBITDA Multiples

   $ 3.04 – 3.40   

No transaction used in the precedent transactions analyses is identical to the merger. Accordingly, an analysis of the results of the foregoing is not mathematical; rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading value of the companies involved in the precedent transactions which in turn, affect the enterprise value and equity value of the companies involved in the transactions to which the merger is being compared. In evaluating the precedent transactions, Stifel made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions, and other matters, such as the impact of competition, industry growth, and the absence of any adverse material change in the financial condition of Entropic or the companies involved in the precedent transactions or the industry or in the financial markets in general, which could affect the public trading value of the companies involved in the selected transactions which in turn, affect the enterprise value and equity value of the companies involved in the transactions to which the merger is being compared.

Discounted Cash Flow Analysis

Entropic

Stifel used financial projections of Entropic as a standalone company for the period from the first fiscal quarter of 2015 through fiscal year 2017, as provided by Entropic’s management, to perform a discounted cash flow analysis of Entropic as a standalone company based on the terminal multiple method. In conducting this analysis, Stifel assumed that Entropic would perform in accordance with these projections, as provided by Entropic’s management.

Stifel first estimated the terminal value of the projected cash flows by applying a range of terminal multiples Stifel deemed relevant to Entropic’s estimated fiscal year 2017 EBITDA, which multiples ranged from 9.0x to 11.0x, and were determined considering the results of the selected company and precedent transactions analyses described above, applying Stifel’s professional judgment. Stifel calculated projected unlevered free cash flow from the period from the first fiscal quarter of 2015 through fiscal year 2017 using management’s projections and discounted these cash flows and the terminal value to present values using discount rates of 12.0% – 14.0%,

 

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based on Entropic’s weighted average cost of capital, consideration of Entropic’s company-specific circumstances and Stifel’s business and industry knowledge. This analysis indicated a range of enterprise values which Stifel then increased by Entropic’s net cash to calculate a range of equity values. These equity values were then divided by fully-diluted shares outstanding using the treasury stock method to calculate implied equity values ranging from $1.69 to $1.79 per share of Entropic common stock.

Stifel also performed a second case discounted cash flow analysis based on the terminal multiple method, assuming the addition of certain operating synergies, as estimated by MaxLinear’s management, which increased the projected cash flows by $10 million in 2015, and $20 million in each of 2016 and 2017, but otherwise utilized the same data, assumptions and methodologies as the first case. The second case discounted cash-flow analysis yielded implied equity values ranging from $3.38 to $3.76 per share of Entropic common stock.

MaxLinear

Stifel used financial projections of MaxLinear as a standalone company for the period from the first fiscal quarter of 2015 through fiscal year 2017, as provided by MaxLinear’s management, to perform a discounted cash flow analysis of MaxLinear as a standalone company based on the terminal multiple method. In conducting this analysis, Stifel assumed that MaxLinear would perform in accordance with these projections, as provided by MaxLinear’s management.

Stifel first estimated the terminal value of the projected cash flows by applying a range of terminal multiples Stifel deemed relevant to MaxLinear’s estimated fiscal year 2017 EBITDA, which multiples ranged from 9.0x to 11.0x, and were determined considering the results of the selected company and precedent transactions analyses described above, applying Stifel’s professional judgment. Stifel calculated projected unlevered free cash flow from the period from the first fiscal quarter of 2015 through fiscal year 2017 using management’s projections and discounted these cash flows and the terminal value to present values using discount rates of 12.0% – 14.0%, based on MaxLinear’s weighted average cost of capital, consideration of MaxLinear’s company-specific circumstances and Stifel’s business and industry knowledge. This analysis indicated a range of enterprise values which Stifel then increased by MaxLinear’s net cash to calculate a range of equity values. These equity values were then divided by fully-diluted shares outstanding using the treasury stock method to calculate implied equity values ranging from $14.09 to $16.39 per share of MaxLinear Class A common stock.

The foregoing description is only a summary of the material financial analyses performed by Stifel in arriving at its Opinion. The summary alone does not constitute a complete description of the financial analyses Stifel employed in reaching its conclusions. None of the analyses performed by Stifel were assigned a greater significance by Stifel than any other, nor does the order of analyses described represent relative importance or weight given to those analyses by Stifel. No methodology employed by Stifel can be viewed individually, and if viewed in isolation could create a misleading or incomplete view of the financial analyses performed by Stifel. Additionally, no company or transaction used in any analysis as a comparison is identical to Entropic, MaxLinear, or the merger and the subsequent merger, and they all differ in material ways. Accordingly, an analysis of the results described above is not mathematical; rather it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading value of the selected companies or transactions to which they are being compared. Stifel used these analyses to determine the impact of various operating metrics on the implied enterprise values and implied per share equity values of Entropic and MaxLinear. Each of these analyses yielded a range of implied enterprise values and implied per share equity values, and therefore, such implied enterprise value ranges and implied per share equity values developed from these analyses were viewed by Stifel collectively and not individually. Stifel made its determination as to the fairness, from a financial point of view, to MaxLinear of the merger consideration to be paid by MaxLinear to the holders of Merger Shares in the merger pursuant to the merger agreement, as of the date of the Opinion, on the basis of its experience and professional judgment after considering the results of all of the analyses performed.

 

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The preparation of a fairness opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at the Opinion, Stifel considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor considered by it. Stifel believes that the summary provided and the analyses described above must be considered as a whole and that selecting portions of these analyses, without considering all of them, would create an incomplete view of the process underlying Stifel’s analyses and the Opinion; therefore, the range of valuations resulting from any particular analysis described above should not be taken to be Stifel’s view of the actual value of Entropic or MaxLinear.

Miscellaneous

MaxLinear agreed to pay Stifel a fee (the “Retainer Fee”) of $50,000 upon its engagement to provide financial advisory services to MaxLinear and a fee (the “Opinion Fee”) of $1,000,000 for its services as financial advisor to the MaxLinear Board upon delivery of the Opinion (neither of which are contingent upon the consummation of the merger) and a fee (the “Transaction Fee”) for its services as financial advisor to MaxLinear in connection with the merger of $3,000,000, all of which Transaction Fee is contingent upon the completion of the merger; provided that the Retainer Fee and the Opinion Fee will be credited against the Transaction Fee in the event that the merger is consummated. Stifel will not receive any other significant payment or compensation contingent upon the successful consummation of the merger. In the event the merger is not consummated and MaxLinear receives a termination or break-up fee, then MaxLinear shall pay Stifel a termination fee equal to 33% of such termination or break-up fee received by MaxLinear, but in no case would such amount exceed $1,000,000. In addition, MaxLinear agreed to reimburse Stifel for its reasonable expenses in connection with its engagement, subject to certain limitations, and to indemnify Stifel for certain liabilities arising out of its engagement. Other than the services provided by Stifel to MaxLinear in connection with the merger and the Opinion, Stifel has not provided any investment banking or financial services to MaxLinear in the two years preceding the date of the Opinion. Stifel has not provided any investment banking or financial services to Entropic in the two years preceding the date of the Opinion.

Stifel may seek to provide investment banking services to MaxLinear or its affiliates in the future, for which Stifel would seek customary compensation. In the ordinary course of its business, Stifel and its clients may transact in the equity securities of each of MaxLinear and Entropic and may at any time hold a long or short position in such securities.

Certain Unaudited Prospective Financial Information Reviewed by MaxLinear’s Board of Directors and MaxLinear’s Financial Advisor

As a matter of course, MaxLinear does not publicly disclose long-term projections of future financial results other than limited short-term guidance concerning select financial and operating metrics disclosed as part of its quarterly earnings announcements. In connection with its evaluation of the merger, MaxLinear’s board of directors considered certain unaudited, non-public financial projections of MaxLinear as a standalone company for each of the years ending December 31, 2015, 2016, and 2017 and certain unaudited, non-public financial projections of Entropic as a standalone company for each of the years ending December 31, 2015, 2016, and 2017. MaxLinear’s board of directors also considered certain unaudited, non-public financial projections of Entropic for each of the years ending December 31, 2015, 2016, and 2017 that had been separately prepared by MaxLinear’s management based on Entropic’s financial projections. As further disclosed below, MaxLinear’s management prepared such adjusted Entropic projections based on its analysis of the assumptions underlying the Entropic financial projections and in an effort to evaluate the advisability of the merger in a potential downside scenario where the revenue and operating results anticipated by the Entropic financial projections were not achieved. The above referenced financial projections with respect to Entropic (other than the adjusted Entropic projections) were provided to MaxLinear’s financial advisor on January 28, 2015 and the above referenced financial projections with respect to MaxLinear were provided to MaxLinear’s financial advisor on January 29, 2015. Because the financial projections set forth below were prepared on a standalone basis (except with respect to certain synergies discussed below), they do not give effect to the proposed merger or any synergies expected to result from the acquisition. A summary of these financial projections are set forth below.

 

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The inclusion of the financial projections below should not be deemed an admission or representation by MaxLinear, Entropic, or any of their respective officers, directors, affiliates, advisors, or other representatives with respect to such projections. The financial projections included below are not included to influence your views on the merger described in this joint proxy statement/prospectus but solely to provide stockholders access to certain non-public information that was provided to MaxLinear’s board of directors in connection with its evaluation of the merger and to MaxLinear’s financial advisor to assist with its financial analyses as described in the section entitled “Opinion of MaxLinear’s Financial Advisor.” The information from the financial projections included below should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding MaxLinear and Entropic contained in each company’s respective public filings with the SEC.

The unaudited prospective financial information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, or GAAP. Neither the independent registered public accounting firm of MaxLinear and Entropic nor any other independent accountant has audited, reviewed, compiled, examined or performed any procedures with respect to the accompanying unaudited prospective financial information for the purpose of its inclusion herein, and accordingly, neither the independent registered public accounting firm of MaxLinear and Entropic nor any other independent accountant expresses an opinion or provides any form of assurance with respect thereto for the purpose of this joint proxy statement/prospectus. The report of the independent registered public accounting firm of MaxLinear contained in the Annual Report of MaxLinear on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this joint proxy statement/prospectus, relates to the historical financial information of MaxLinear. The report of the independent registered public accounting firm of Entropic contained in the Annual Report of Entropic on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this joint proxy statement/prospectus, relates to the historical financial information of Entropic.

The financial projections are in general prepared for internal use and are subjective in many respects. As a result, these financial projections are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Although Entropic and MaxLinear believe their respective assumptions (as set forth below) to be reasonable, all financial projections are inherently uncertain, and MaxLinear and Entropic expect that differences will exist between actual and projected results. Although presented with numerical specificity, the financial projections reflect numerous variables, estimates, and assumptions made by the managements of MaxLinear or Entropic, as applicable, at the time they were prepared, and also reflect general business, economic, market, and financial conditions and other matters, all of which are difficult to predict and many of which are beyond MaxLinear’s and Entropic’s control. In addition, the financial projections cover multiple years, and this information by its nature becomes subject to greater uncertainty with each successive year. Accordingly, there can be no assurance that the estimates and assumptions made in preparing the financial projections will prove accurate or that any of the financial projections will be realized.

The financial projections with respect to MaxLinear included assumptions relating to, among others things, (i) MaxLinear’s growth projections in specific products for cable, terrestrial, satellite, and other applications in each fiscal year ending prior to or on December 31, 2017; (ii) opportunities associated with new product introductions, including DOCSIS 3.1 cable data products, optimized second-generation satellite gateway and outdoor unit products, and associated adjacent products such as programmable gain amplifiers designed for cable data applications and Ku-band satellite down-converters; (iii) MaxLinear’s strategy to expand its addressable market, including with its recent acquisition of Physpeed targeting optical data applications, as well as potential opportunities for MaxLinear to develop and market cable and wireless infrastructure products; (iv) long-term trends in the markets in which MaxLinear operates, including the expected market transition from DOCSIS 3.0 to DOCSIS 3.1 cable data standards, the potential transition from analog to digital satellite channel stacking solutions, the pace of penetration of new multi-tuner solutions in the satellite gateway market, and the adoption of various 100-Gigabit optical interconnect products in data center and telecommunications applications; (v) MaxLinear’s expected growth in headcount and operating expenses, with expected growth in research and

 

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development as MaxLinear focuses on expanding its product portfolio and enhancing existing products, and expected growth in selling, general and administrative expenses as it expands its sales and marketing organization to enable expansion into existing and new markets; and (vi) assumed taxes of approximately $600,000 per year. MaxLinear also assumed that there will be no material change in the competitive environment in the markets in which MaxLinear competes, there will be no material acquisitions or dispositions by MaxLinear during the period covered by the projections, there will be no material change in the present management or control of MaxLinear or its existing operational strategy, and there will be no material change in legislation or regulatory requirements impacting on MaxLinear’s operations or its accounting policies. The financial projections with respect to MaxLinear are based on MaxLinear’s existing operations without taking into account the potential acquisition of Entropic. The financial projections with respect to Entropic included the assumptions discussed under the section entitled “Certain Unaudited Prospective Financial Information Reviewed by Entropic’s Board of Directors and Entropic’s Financial Advisor” below.

The financial projections are subject to many risks and uncertainties and you are urged to review (i) the section entitled “Risk Factors” beginning on page 34 of this joint proxy statement/prospectus for a description of risk factors relating to the merger; (ii) MaxLinear’s most recent SEC filings for a description of risk factors with respect to MaxLinear’s businesses; and (iii) Entropic’s most recent SEC filings for a description of risk factors with respect to Entropic’s businesses. You should also read the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 47 of this joint proxy statement/prospectus for additional information regarding the risks inherent in forward-looking information such as the financial projections.

The inclusion of the financial projections herein should not be regarded as an indication that MaxLinear, Entropic, or any of their respective affiliates or representatives considered or consider the financial projections to be necessarily indicative of actual future events, and the financial projections should not be relied upon as such. The financial projections do not take into account any circumstances or events occurring after the date they were prepared. Neither MaxLinear nor Entropic intends to, and each disclaims any obligation to, update, correct, or otherwise revise the financial projections to reflect circumstances existing or arising after the date such financial projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions or other information underlying the financial projections are shown to be in error. Furthermore, the financial projections do not take into account the effect of any failure of the merger to be consummated and should not be viewed as accurate or continuing in that context.

The financial projections set forth below include earnings before interest, taxes, depreciation and amortization (EBITDA) and earnings before interest and taxes (EBIT), which are non-GAAP measures. The operating expenses included in EBITDA and EBIT exclude share-based compensation expense, amortization of purchased intangibles, and other one-time expenses that would be included in operating expenses under GAAP. Due to the forward-looking nature of the financial projections, specific quantifications of the amounts that would be required to reconcile such projections to GAAP measures are not available. MaxLinear believes that there is a degree of volatility with respect to certain GAAP measures, and certain adjustments made to arrive at the relevant non-GAAP measures, which preclude MaxLinear from providing accurate forecasted non-GAAP reconciliations.

 

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In light of the foregoing factors and the uncertainties inherent in financial projections, stockholders are cautioned not to place undue reliance, if any, on the financial projections.

The following table presents selected summary financial projections with respect to MaxLinear prepared by MaxLinear’s management and made available to the MaxLinear board of directors and MaxLinear’s financial advisor. The financial information set forth in the line items for revenues, depreciation and amortization, EBIT, income taxes, and capital expenditures were prepared by MaxLinear management. The financial information set forth in the line items for EBITDA, unlevered after-tax income, working capital investment, and free cash flow were extrapolated by MaxLinear’s management, in consultation with Stifel.

 

     2015E      2016E      2017E  
     (in millions)  

Revenues

   $ 151.0       $ 192.1       $ 269.3   

EBITDA

     22.9         35.3         75.2   
  

 

 

    

 

 

    

 

 

 

EBIT

  17.7      31.5      71.7   

Less: Income Taxes

  (0.6   (0.6   (1.0
  

 

 

    

 

 

    

 

 

 

Unlevered After-Tax Income

  17.1      30.9      70.7   

Plus: Depreciation and Amortization

  5.2      3.8      3.5   

Less: Capital Expenditures

  (3.8   (4.8   (6.0

Less: Working Capital Investment(1)

  (5.6   (4.7   (16.5
  

 

 

    

 

 

    

 

 

 

Free Cash Flow(2)

$ 12.9    $ 25.2    $ 51.7   

 

(1) For each applicable period, calculated as follows: current assets (less cash & equivalents) less current liabilities.
(2) For each applicable period, calculated from after-tax operating income by subtracting capital expenditures, subtracting changes in working capital, and adding depreciation and amortization for each period.

After the merger was publicly announced, Entropic and Barclays became aware that the financial projections provided by MaxLinear for purposes of completing the calculation of the unlevered free cash flow of MaxLinear as set forth in the above table contained certain errors. Such errors were the result of an incorrect formula in the spreadsheet used to calculate projected cash flows and did not arise from any errors or inaccuracies in the underlying data or assumptions used to calculate the projections, including assumptions with respect to revenue, gross margins or otherwise. Such errors resulted in the misstatement of the projections set forth in the line items in the above table titled depreciation and amortization, capital expenditures, change in working capital and unlevered free cash flow. When the corrected financial projections (set forth in the following table) are used, such line items with respect to MaxLinear equal the following:

 

     2015E      2016E      2017E  
     (in millions)  

Depreciation and Amortization

     5.2         3.5         3.4   

Capital Expenditures

     (4.0      (6.0      (4.0

Change in Working Capital

     (5.6      (4.7      (16.5
  

 

 

    

 

 

    

 

 

 

Unlevered Free Cash Flow

$ 12.7    $ 23.7    $ 53.6   
  

 

 

    

 

 

    

 

 

 

 

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The following table presents selected financial projections with respect to Entropic made available to the MaxLinear board of directors and MaxLinear’s financial advisor. The financial information set forth in the line items for revenues, depreciation and amortization, EBIT, income taxes, and capital expenditures were prepared by Entropic management. The financial information set forth in the line items for EBITDA, unlevered after-tax income, working capital investment, and free cash flow were extrapolated by MaxLinear’s management, in consultation with Stifel, from financial statements prepared by Entropic’s management.

 

     2015E      2016E      2017E  
     (in millions)   

Revenues

   $ 180.4       $ 166.8       $ 163.3   

EBITDA

     17.5         9.1         6.9   
  

 

 

    

 

 

    

 

 

 

Less: Depreciation and Amortization

  (5.3   (3.8   (3.8
  

 

 

    

 

 

    

 

 

 

EBIT

  12.2      5.3      3.1   

Less: Income Taxes

  (0.4   (0.4   (0.4
  

 

 

    

 

 

    

 

 

 

Unlevered After-Tax Income

  11.8      4.9      2.7   

Plus: Depreciation and Amortization

  5.3      3.8      3.8   

Less: Capital Expenditures

  (2.0   (2.0   (4.0

Less: Working Capital Investment(1)

  (8.6   (0.1   0.6   
  

 

 

    

 

 

    

 

 

 

Free Cash Flow(2)(3)

$ 6.5    $ 6.6    $ 3.1   

 

(1) For each applicable period, calculated as follows: current assets (less cash & equivalents) less current liabilities.
(2) For each applicable period, calculated from after-tax operating income by subtracting capital expenditures, subtracting changes in working capital, and adding depreciation and amortization for each period.
(3) MaxLinear management’s estimated operating synergies following the merger could increase cash flows by $10 million in 2015 and $20 million in each of 2016 and 2017. While such synergies are not reflected in these projections or the other MaxLinear projections set forth in this section, the synergies were provided to MaxLinear’s board of directors and financial advisor in connection with their valuation of the merger, including for use by MaxLinear’s financial advisor in its financial analyses. See the section entitled “Opinion of MaxLinear’s Financial Advisor” for further details.

Adjusted Entropic Projections—Downside Scenario

As indicated above, MaxLinear’s management prepared downside scenario projections with respect to Entropic based on MaxLinear management’s review of Entropic’s product lines and market opportunity. Among

other purposes, MaxLinear prepared these adjusted financial projections as part of its due diligence and to confirm that its financial analysis addressed the risk of underperformance of Entropic’s products during the periods covered by the projections. During the February 1, 2015 board meeting where MaxLinear’s financial advisor, Stifel, provided a preliminary review of its fairness opinion, the MaxLinear board requested that Stifel also prepare a separate discounted cash flow analysis, in addition to those used in Stifel’s fairness opinion, based on the downside scenario to determine whether the discounted cash flow analysis would be materially different than the discounted cash flow analysis used for purposes of the Stifel fairness opinion. Stifel presented the results of this separate discounted cash flow analysis at the MaxLinear board’s February 3, 2015 meeting, and the board concluded that based on the analysis, the differences were not material. Stifel did not use or otherwise rely on such adjusted Entropic projections or the associated discounted cash flow analysis for purposes of its fairness opinion.

 

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The following table presents selected summary adjusted Entropic projections. The financial information set forth in the line items for revenues, depreciation and amortization, EBIT, income taxes, and capital expenditures were prepared by MaxLinear management, based on adjustments to financial information provided by Entropic. The financial information set forth in the line items for EBITDA, unlevered after-tax income, working capital investment, and free cash flow were extrapolated by MaxLinear’s management, in consultation with Stifel.

 

     2015E      2016E      2017E  
     (in millions)   

Revenues

   $ 180.6       $ 161.4       $ 145.9   

EBITDA

     18.1         8.6         6.0   
  

 

 

    

 

 

    

 

 

 

Less: Depreciation and Amortization

  (5.3   (3.8   (3.8
  

 

 

    

 

 

    

 

 

 

EBIT

  12.8      4.8      2.2   

Less: Income Taxes

  (0.4   (0.4   (0.4
  

 

 

    

 

 

    

 

 

 

Unlevered After-Tax Income

  12.4      4.4      1.8   

Plus: Depreciation and Amortization

  5.3      3.8      3.8   

Less: Capital Expenditures

  (2.0   (2.0   (4.0

Less: Working Capital Investment(1)

  (8.6   (0.1   0.6   
  

 

 

    

 

 

    

 

 

 

Free Cash Flow(2)

$ 7.1    $ 6.1    $ 2.2   

 

(1) For each applicable period, calculated as follows: current assets (less cash & equivalents) less current liabilities.
(2) For each applicable period, calculated from after-tax operating income by subtracting capital expenditures, subtracting changes in working capital, and adding depreciation and amortization for each period.

Entropic Board of Directors’ Recommendation and Reasons for the Merger

At a special meeting on February 3, 2015, the Entropic board of directors unanimously:

 

    determined that the terms of the merger agreement were advisable and fair to, and in the best interests of, Entropic and its stockholders;

 

    approved the merger agreement; and

 

    recommended that the Entropic stockholders approve the merger agreement and the merger.

In evaluating the merger agreement and the merger, the Entropic board of directors consulted with Entropic’s senior management, legal counsel and financial advisors and, in recommending that Entropic’s stockholders adopt the merger agreement, the Entropic board of directors considered a number of factors, including the following:

 

    The fact that the Entropic stockholders will receive the immediate certainty of receiving $1.20 in cash and will benefit from the merger through the Entropic stockholders’ pro forma ownership of approximately 35% of the combined company. The Entropic board of directors believes this pro forma ownership will provide Entropic stockholders with meaningful participation in the combined company and a potential opportunity to realize the strategic synergies described below. In addition, the Entropic board of directors reviewed the anticipated relative contributions of each of Entropic and MaxLinear to a combined company based on 2011 through 2014 revenue, EBITDA and net income of each company adjusted for the cash merger consideration being paid to the Entropic stockholders, and believes that approximately 35% pro forma ownership (combined with the cash payment to the Entropic stockholders) is reflective of the relative contribution of Entropic to the combined company.

 

    The belief that the combined company will benefit significantly from strategic and operating cost synergies, including the following:

 

   

Entropic and MaxLinear are both focused on semiconductor solutions for the home entertainment market. Entropic is the inventor and market creator of two core systems for home connectivity,

 

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MoCA and satellite channel stacking, and has strong relationships with U.S. cable and satellite service providers and with manufacturers that supply worldwide video service providers.

 

    MaxLinear is a pioneer of broadband CMOS analog RF/mixed-signal semiconductors with strong market position in TV and terrestrial tuners, cable and satellite front-ends and has strong relationships with manufacturers that supply worldwide broadband data products. The combination of these complementary product offerings will create a one-stop company for RF/mixed signal front ends and connectivity solutions and should make the combined company more relevant to key customers, expand the combined company’s addressable market and make the combined company more competitive than either Entropic or MaxLinear on a standalone basis.

 

    The combined company will have a product roadmap that includes a focus on the cable, satellite and enterprise infrastructure markets, which are expected to generate greater revenue growth opportunities than the markets that would be addressed by Entropic as a standalone company.

 

    Entropic and MaxLinear have significant customer overlap with non-overlapping, complementary product offerings, and the combined company should be in the position to cross-sell products into this customer base, becoming a more significant long term partner to such customers.

 

    The combined company is expected to be able to integrate and leverage combined research and development platform for the commercialization of next generation products and achieve operating synergies through supply chain efficiencies, and achieve savings through the elimination of facilities and public company overhead redundancies, with MaxLinear targeting the achievement of $20 million in operating cost synergies by the end of the first year following the closing.

 

    The Entropic board of directors believes that the increased scale of the combined company together with the projected cost savings will result in lower combined operating expenses and expand the combined company’s profit margins, which will better position the combined company, compared to Entropic on a standalone basis, to invest in the development of products in its long term product pipeline and to compete in the highly competitive semiconductor space.

 

    That the total consideration per outstanding share of Entropic common stock was approximately $3.01 (based on the closing price of MaxLinear Class A common stock on February 2, 2015), representing an approximate 13% premium over the closing price of the Entropic common stock on February 2, 2015, the last full trading day before the merger agreement was approved by the Entropic board of directors, and a 20% premium over the weighted average closing price of the Entropic common stock for the 30-day period prior ending February 2, 2015.

 

    The Entropic board of directors’ assessment of Entropic’s current revenue streams, expectations about the future decline in the analog channel stacking switch market as customers switch to digital solutions, and the potential impact to Entropic’s future revenues as a result of that decline, offset by Entropic’s potential revenues in emerging categories and the Entropic board of directors’ assessment that depending on the timing of the switch to digital solutions, the success of Entropic’s future launch of a digital stacking solution and the timing and success of new products in emerging categories, Entropic could face significant revenue challenges in 2016, if it remained a standalone company.

 

    The Entropic board of directors’ belief that it had conducted a thorough review of strategic alternatives after making a public announcement of its review in September 2014, that there was a low likelihood that a competitive proposal would emerge, and that other third parties would not likely provide the same comparable strategic upside as a combination with MaxLinear.

 

    The Entropic board of directors’ belief, based upon the negotiations with MaxLinear, that the consideration to be paid by MaxLinear is the most that MaxLinear was willing to pay for Entropic and that the terms of the merger agreement include the most favorable terms to Entropic to which MaxLinear was willing to agree.

 

   

The terms of the merger agreement, including the parties’ representations, warranties and covenants, the conditions and the ability of Entropic to respond to unsolicited offers for an acquisition from a third

 

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party prior to closing, the right of the Entropic board of directors, after complying with the terms of the merger agreement, to change its recommendation that stockholders vote to adopt the merger agreement in the event that Entropic receives a superior offer (subject to certain limitations), and the determination that the termination fee of $11,650,000 (approximately 4.0% of the equity value of the transaction) is within the customary range of termination fees for transactions of this type.

 

    The financial presentation and opinion of Barclays delivered to the Entropic board of directors that, based upon and subject to the qualifications, limitations and assumptions stated in its opinion, the merger consideration to be offered to the stockholders of Entropic (other than directors and executive officers of Entropic who are executing certain voting agreements in favor of MaxLinear in connection with the merger agreement) in the merger is fair, from a financial point of view, to such stockholders, as more fully described in the section entitled “The Merger—Opinion of Entropic’s Financial Advisor.” The Entropic board of directors was aware that Barclays became entitled to certain fees upon delivery of its fairness opinion and will become entitled to additional fees if the proposed transaction is consummated, as more fully described below in the section entitled “The Merger—Opinion of Entropic’s Financial Advisor.”

The Entropic board of directors also considered a variety of risks and other potentially negative factors of the merger and the merger agreement, including the following:

 

    the effect of the announcement and pendency of the merger on Entropic’s stock price, operations and employees and its ability to retain key employees;

 

    the risk that either the MaxLinear stockholders may not approve the issuance of shares of MaxLinear Class A common stock in the merger pursuant to the terms of the merger agreement or that the Entropic stockholders may not adopt the merger agreement;

 

    the risk that the merger might not be consummated, including the risks that the trading price of Entropic’s common stock could be adversely affected, Entropic would have incurred substantial transaction and opportunity costs, Entropic’s business might be subject to substantial disruptions and delays that could adversely impact its business plan and prospects and Entropic may experience a loss of key employees after the announcement of the merger agreement;

 

    the fact that the merger agreement requires Entropic to pay a termination fee of $11,650,000 if the merger agreement is terminated in certain circumstances could potentially deter third parties from making a competing bid to acquire Entropic prior to the closing of the merger, and could impact Entropic’s ability to engage in another strategic transaction for 12 months if the merger agreement is terminated in certain circumstances; and

 

    the restrictions in the merger agreement on the conduct of Entropic’s business prior to the consummation of the merger, which may delay or prevent Entropic from undertaking business opportunities that may arise prior to the consummation of the merger.

In addition, the Entropic board of directors considered the interests that certain of its directors and executive officers may have with respect to the merger that are different from or in addition to their interests as stockholders of Entropic, generally, as described under “The Merger—Interests of the Directors and Executive Officers of Entropic in the Merger.” The Entropic board of directors concluded that the risks, uncertainties, restrictions and potentially negative factors associated with the merger were outweighed by the potential benefits of the merger.

The Entropic board of directors unanimously recommends that Entropic stockholders vote FOR adoption of the merger agreement.

The foregoing discussion of the Entropic board of directors’ reasons for its recommendation to approve the merger agreement is not meant to be exhaustive, but addresses the material information and factors considered by the Entropic board of directors in consideration of its recommendation. In view of the wide variety of factors considered by the Entropic board of directors in connection with the evaluation of the merger and the complexity

 

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of these matters, the Entropic board of directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. Rather, the directors made their determinations and recommendations based on the totality of the information presented to them, and the judgments of individual members of the Entropic board of directors may have been influenced to a greater or lesser degree by different factors.

Opinion of Entropic’s Financial Advisor

In September 2014, the board of directors of Entropic engaged Barclays to act as its financial advisor with respect to pursuing strategic alternatives for Entropic, including a possible sale of Entropic. On February 3, 2015, Barclays rendered its oral opinion (which was subsequently confirmed in writing) to Entropic’s board of directors that, as of such date and based upon and subject to the qualifications, limitations and assumptions stated in its opinion, the merger consideration to be offered to the stockholders of Entropic (other than directors and executive officers of Entropic who are executing certain voting agreements in favor of MaxLinear in connection with the merger agreement) in the First Step Merger is fair, from a financial point of view, to such stockholders.

The full text of Barclays’ written opinion, dated as of February 3, 2015, is attached as Annex C to this joint proxy statement/prospectus. Barclays’ written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by Barclays in rendering its opinion. You are encouraged to read the opinion carefully in its entirety. The following is a summary of Barclays’ opinion and the methodology that Barclays used to render its opinion. This summary is qualified in its entirety by reference to the full text of the opinion.

Barclays’ opinion, the issuance of which was approved by Barclays’ Valuation and Fairness Opinion Committee, is addressed to the board of directors of Entropic, addresses only the fairness, from a financial point of view, of the merger consideration to be offered to the stockholders of Entropic (other than directors and executive officers of Entropic who are executing certain voting agreements in favor of MaxLinear in connection with the merger agreement) in the First Step Merger and does not constitute a recommendation to any stockholder of Entropic as to how such stockholder should vote or act with respect to the proposed transaction or any other matter. The terms of the proposed transaction were determined through arm’s-length negotiations between Entropic and MaxLinear and were unanimously approved by Entropic’s board of directors. Barclays did not recommend any specific form of consideration to Entropic or that any specific form of consideration constituted the only appropriate consideration for the proposed transaction. Barclays was not requested to address, and its opinion does not in any manner address, Entropic’s underlying business decision to proceed with or effect the proposed transaction or the likelihood of consummation of the proposed transaction. In addition, Barclays expressed no opinion on, and its opinion does not in any manner address, the fairness of the amount or the nature of any compensation to any officers, directors or employees of any parties to the proposed transaction, or any class of such persons, relative to the merger consideration to be offered to the stockholders of Entropic in the proposed transaction. No limitations were imposed by Entropic’s board of directors upon Barclays with respect to the investigations made or procedures followed by it in rendering its opinion.

In arriving at its opinion, Barclays, among other things:

 

    reviewed and analyzed the merger agreement, dated as of February 3, 2015, and the specific terms of the proposed transaction;

 

    reviewed and analyzed publicly available information concerning Entropic and MaxLinear that Barclays believed to be relevant to its analysis, including the Annual Reports on Form 10-K of each of Entropic and MaxLinear for the fiscal year ended December 31, 2013 and Quarterly Reports on Form 10-Q of each of Entropic and MaxLinear for the fiscal quarter ended September 30, 2014, and other relevant filing with the Securities and Exchange Commission;

 

    reviewed and analyzed financial and operating information with respect to the business, operations and prospects of Entropic furnished to Barclays by Entropic, including financial projections prepared by management of Entropic;

 

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    reviewed and analyzed financial and operating information with respect to the business, operations and prospects of MaxLinear furnished to Barclays by MaxLinear, including financial projections prepared by management of MaxLinear;

 

    reviewed and analyzed a trading history of Entropic common stock from December 6, 2007 to February 2, 2015 and a comparison of such trading history with those of other companies that Barclays deemed relevant;

 

    reviewed and analyzed a trading history of MaxLinear Class A common stock from March 23, 2013 to February 2, 2015 and a comparison of such trading history with those of other companies that Barclays deemed relevant;

 

    reviewed and analyzed a comparison of the historical financial results and present financial condition of Entropic and MaxLinear with each other and with those of other companies that Barclays deemed relevant;

 

    reviewed and analyzed a comparison of the financial terms of the proposed transaction with the financial terms of certain other transactions that Barclays deemed relevant;

 

    reviewed and analyzed the pro forma impact of the proposed transaction on the future financial performance of the combined company, including cost savings, operating synergies and other strategic benefits expected by management of Entropic to result from a combination of the business;

 

    reviewed and analyzed published estimates of independent research analysts with respect to the future performance and price targets of Entropic and MaxLinear;

 

    reviewed and analyzed the relative contributions of Entropic and MaxLinear to the future financial performance of the combined company on a pro forma basis;

 

    reviewed and analyzed the results of Barclays’ effort to solicit indications of interest from third parties with respect to a sale of all or a part of Entropic;

 

    had discussions with the management of Entropic concerning its business, operations, assets, liabilities, financial condition and prospects; and

 

    undertook such other studies, analyses and investigations as Barclays deemed appropriate.

In arriving at its opinion, Barclays assumed and relied upon the accuracy and completeness of the financial and other information used by Barclays without any independent verification of such information (and Barclays had not assumed responsibility or liability for any independent verification of such information). Barclays also relied upon the assurances of the respective managements of Entropic and MaxLinear that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the financial projections of Entropic, upon advice of Entropic, Barclays assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Entropic as to Entropic’s future financial performance and that Entropic would perform in accordance with such projections. With respect to the financial projections of MaxLinear, upon advice of MaxLinear, Barclays assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of MaxLinear as to MaxLinear’s future financial performance and that MaxLinear would perform in accordance with such projections. In addition, upon the advice of Entropic, Barclays assumed that the amounts and timing of the expected synergies are reasonable and that the expected synergies will be realized in accordance with such estimates. In arriving at its opinion, Barclays assumed no responsibility for and expressed no view as to any such projections or estimates or the assumptions on which they were based. In arriving at its opinion, Barclays did not conduct a physical inspection of the properties and facilities of Entropic or MaxLinear and did not make or obtain any evaluations or appraisals of the assets or liabilities of Entropic or MaxLinear. Barclays’ opinion was necessarily based upon market, economic and other conditions as they existed on, and could be evaluated as of the date of its opinion. Barclays assumed no responsibility for updating or revising its opinion based on events or circumstances that may have occurred after the date of its opinion. Barclays did not express an opinion as to the prices at which shares of Entropic common stock or MaxLinear Class A common stock would trade following the announcement of the proposed transaction or the prices at which shares of MaxLinear Class A common stock would trade following the consummation of the proposed transaction.

 

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In connection with rendering its opinion, Barclays performed certain financial, comparative and other analyses as summarized below. In arriving at its opinion, Barclays did not ascribe a specific range of values to the shares of Entropic common stock but rather made its determination as to fairness, from a financial point of view, to Entropic’s stockholders (other than directors and executive officers of Entropic who are executing certain voting agreements in favor of MaxLinear in connection with the merger agreement) of the merger consideration to be offered to such stockholders in the First Step Merger on the basis of various financial and comparative analyses. The preparation of a fairness opinion is a complex process and involves various determinations as to the most appropriate and relevant methods of financial and comparative analyses and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to summary description.

In arriving at its opinion, Barclays did not attribute any particular weight to any single analysis or factor considered by it but rather made qualitative judgments as to the significance and relevance of each analysis and factor relative to all other analyses and factors performed and considered by it and in the context of the circumstances of the particular transaction. Accordingly, Barclays believes that its analyses must be considered as a whole, as considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion.

The following is a summary of the material financial analyses used by Barclays in preparing its opinion to Entropic’s board of directors. Certain financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses used by Barclays, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses. In performing its analyses, Barclays made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Entropic or any other parties to the proposed transaction. None of Entropic, MaxLinear, Merger Sub One, Merger Sub Two, Barclays or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of the businesses do not purport to be appraisals or reflect the prices at which the businesses may actually be sold.

Entropic

The following is a summary of the financial analyses used by Barclays in preparing its standalone valuation analysis of Entropic.

Comparable Company Analysis

In order to assess how the public market values shares of similar publicly traded companies, Barclays reviewed and compared specific financial and operating data relating to Entropic with selected semiconductor companies that Barclays, based on its experience in the semiconductor industry, deemed comparable to Entropic. The companies that Barclays selected as comparable to Entropic were:

 

Small Cap Companies(1)

  

Set-Top Box / Home Companies

Audience, Inc.

  

Broadcom Corp.

DSP Group Inc.

  

Marvell Technology Group Ltd.

Pericom Semiconductor Corp.

  

MaxLinear, Inc.

Sigma Designs, Inc.

  

 

(1) “Small Cap Companies” were selected companies with a market capitalization of less than $500,000,000 that Barclays, based on its experience in the semiconductor industry, deemed comparable to Entropic.

 

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Barclays calculated and compared various financial multiples and ratios of Entropic, and those of the respective selected comparable companies. As part of its comparable company analysis with respect to Entropic, Barclays calculated and analyzed each company’s enterprise value, or EV, as a multiple of its calendar year 2014 and 2015 estimated revenue, and its calendar year 2015 and 2016 estimated earnings before interest, taxes, depreciation and amortization, or EBITDA. Barclays did not consider an EBITDA multiple for calendar year 2014 because Entropic had negative EBITDA for such calendar year. The enterprise value of each company was obtained by adding its short and long-term debt to the sum of the market value of its common equity, calculated as fully diluted equity value, using the treasury stock method, based on closing stock prices on February 2, 2015, the value of any preferred stock (at liquidation value), the value of any pension liabilities and the book value of any minority interest, and subtracting its cash, cash equivalents and liquid investments. All of these calculations were performed, and based on publicly available financial data (including FactSet, a subscription-based data source containing historical and estimated financial data) and closing prices, as of February 2, 2015, the last trading date prior to the delivery of Barclays’ opinion. The results of this comparable company analysis for Entropic are summarized below:

Small Cap Companies

 

     EV / Revenue      EV / EBITDA  
     CY 2014E      CY 2015E      CY 2015E      CY 2016E  

High

     1.72x         1.62x         20.8x         9.5x   

Mean

     0.91x         0.88x         14.4x         8.6x   

Median

     0.78x         0.72x         11.3x         9.2x   

Low

     0.37x         0.45x         11.2x         7.3x   

Set-Top Box / Home Companies

 

     EV / Revenue      EV / EBITDA  
     CY 2014E      CY 2015E      CY 2015E      CY 2016E  

High

     2.56x         2.55x         11.9x         10.1x   

Mean

     2.07x         1.97x         10.2x         8.4x   

Median

     2.04x         1.80x         10.4x         7.7x   

Low

     1.60x         1.55x         8.3x         7.5x   

Barclays selected the comparable companies listed above because of similarities in one or more business or operating characteristics with Entropic. However, because no selected comparable company is exactly the same as Entropic, Barclays believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the comparable company analysis. Accordingly, Barclays also made qualitative judgments concerning differences between the business, financial and operating characteristics and prospects of Entropic and the comparable companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degree of operational risk between Entropic and the companies included in the comparable company analysis. Based upon these judgments, Barclays selected a range of multiples for Entropic and applied such ranges to the management projections of Entropic on a standalone basis to calculate ranges of implied value per share of Entropic common stock. The management projections of Entropic are set forth in the section captioned “Certain Unaudited Prospective Financial Information Reviewed by Entropic’s Board of Directors and Entropic’s Financial Advisor” of this joint proxy statement/prospectus. The results of these calculations are summarized as follows:

 

     Selected Multiple Range    Implied Value Per Share of
Entropic common stock

EV / Revenue CY 2014E

   0.80x – 1.20x    $2.72 – $3.51

EV / Revenue CY 2015E

   0.60x – 1.10x    $2.25 – $3.19

EV / EBITDA CY 2015E

   9.0x – 11.0x    $2.78 – $3.14

EV / EBITDA CY 2016E

   8.0x – 10.0x    $1.87 – $2.05

 

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For purposes of its opinion, Barclays calculated the implied value, as of February 2, 2015, of the merger consideration per share of Entropic common stock to be $3.01, which was determined by adding the cash portion of the merger consideration of $1.20 per share of Entropic common stock to $1.81, the implied value of the stock portion of the merger consideration per share of Entropic common stock that was derived by multiplying the closing price of $8.24 per share of MaxLinear Class A common stock on February 2, 2015, the last trading day prior to the announcement of the transaction, by the exchange ratio of 0.2200 of a share of MaxLinear Class A common stock per share of Entropic common stock.

Barclays noted that on the basis of the comparable company analysis with respect to Entropic, the $3.01 implied value of the merger consideration per share of Entropic common stock was (i) above the range of implied value per share of Entropic common stock calculated on a standalone basis using estimated calendar year 2016 EBITDA and (ii) within the ranges of implied value per share of Entropic common stock calculated on a standalone basis using unaudited calendar 2014 revenue, estimated calendar year 2015 revenue and estimated calendar year 2015 EBITDA.

 

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Precedent Transaction Analysis

Barclays reviewed and compared the purchase prices and financial multiples paid in selected other transactions that Barclays, based on its experience with merger and acquisition transactions, deemed relevant. Barclays chose such transactions based on, among other things, the similarity of the applicable target companies in the transactions to Entropic with respect to the size, mix, margins and other characteristics of their businesses. Barclays calculated and compared various financial multiples and ratios of Entropic and the target companies in the precedent transactions. As part of its precedent transactions analysis, for each of the selected transactions, based on information Barclays obtained from publicly available information, Barclays analyzed the enterprise value to Entropic’s last 12-months (“LTM”) revenue and Entropic’s forward 12-months (“FTM”) revenue. The results of this precedent transaction analysis are summarized below:

 

Announcement Date

 

Acquirer

 

Target

  EV / LTM
Revenue
  EV / FTM
Revenue
1/27/2015   Lattice Semiconductor Corp.   Silicon Image, Inc.   1.79x   1.93x

3/10/2014

  Pudong Science and Technology Investment Co., Ltd.   Montage Technology Group Ltd.   4.43x   3.54x

1/4/2012

  Entropic Communications, Inc.   Trident Microsystems, Inc. (STB business)   0.54x   NA

3/16/2011

  MediaTek, Inc.   Ralink Technology, Corp.   1.77x   1.34x

2/18/2011

  CSR plc   Zoran Corp.   1.17x   1.03x

2/7/2011

  Golden Gate Capital   Conexant Systems, Inc.   1.30x   1.58x

9/8/2010

  Zoran Corp.   Microtune, Inc.   0.94x   0.78x

3/22/2010

  Intersil Corp.   Techwell, Inc.   5.69x   4.04x

3/11/2010

  Ralink Technology Corp.   TrendChip Technologies Corp.   2.03x   2.07x

2/3/2010

  Broadcom Corp.   Teknovus, Inc.   NA   NA

10/13/2009

  Sigma Designs, Inc.   CopperGate Communication Ltd.   2.32x   NA

10/5/2009

  Trident Microsystems, Inc.   NXP Semiconductors NV (DTV & STB businesses)   0.43x   NA

7/7/2009

  Golden Gate Capital   Infineon Technologies AG (wireline communications business)   0.63x   0.72x

4/22/2009

  Tallwood Venture Capital   Ikanos Communication, Inc.   0.91x   1.14x

4/22/2009

  Ikanos Communications, Inc.   Conexant Systems, Inc. (broadband access product line)   0.34x   NA

4/1/2009

  Trident Microsystems, Inc.   Micronas Semiconductor Holding AG (video division)   NA   NA

8/25/2008

  Broadcom Corp.   Advanced Micro Devices, Inc. (DTV business)   0.73x   0.71x

4/29/2008

  NXP BV   Conexant Systems, Inc. (broadcast media processing business)   0.71x   NA

6/25/2007

  Infineon Technologies AG   Texas Instruments, Inc. (home DSL business)   0.38x   0.38x

5/14/2007

  DSP Group, Inc.   NXP Semiconductors NV (cordless and VoIP terminals business)   1.57x   NA
    1st Quartile   0.65x   0.76x
    Mean   1.54x   1.60x
    Median   1.06x   1.24x
    3rd Quartile   1.78x   1.96x

 

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The reasons for and the circumstances surrounding each of the precedent transactions analyzed were diverse and there are inherent differences in the business, operations, financial conditions and prospects of Entropic and the companies included in the precedent transaction analysis. Accordingly, Barclays believed that a purely quantitative precedent transaction analysis would not be particularly meaningful in the context of considering the proposed transaction. Barclays therefore made qualitative judgments concerning differences between the characteristics of the selected precedent transactions and the proposed transaction which would affect the acquisition values of the selected target companies and Entropic. Based upon these judgments, Barclays selected ranges of multiples for Entropic and applied such ranges to the management projections of Entropic on a standalone basis to calculate ranges of implied value per share of Entropic common stock. The management projections are set forth in the section captioned “Certain Unaudited Prospective Financial Information Reviewed by Entropic’s Board of Directors and Entropic’s Financial Advisor” of this joint proxy statement/prospectus. The following table sets forth the results of such analysis:

 

     Selected Multiple Range    Implied Value Per Share of
Entropic common stock

EV / LTM Revenue

   0.70x – 1.30x    $2.52 – $3.71

EV / FTM Revenue

   0.70x – 1.30x    $2.44 – $3.56

Barclays noted that on the basis of the precedent transaction analysis, the $3.01 implied value of the merger consideration per share of Entropic common stock was within the ranges of implied value per share of Entropic common stock calculated on a standalone basis using LTM revenue and FTM revenue.

Discounted Cash Flow Analysis

In order to estimate the present value of Entropic common stock, Barclays performed a discounted cash flow analysis of Entropic. A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the “present value” of estimated future cash flows of the asset. “Present value” refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.

To calculate the estimated enterprise value of Entropic using the discounted cash flow method, Barclays added (i) Entropics’s projected after-tax unlevered free cash flows for fiscal years 2015 through 2019 based on management projections to (ii) the “terminal value” of Entropic as of the end of fiscal year 2019, and discounted such amount to its present value (as of February 2, 2015) using a range of selected discount rates. The management projections of Entropic are set forth in the section captioned “Certain Unaudited Prospective Financial Information Reviewed by Entropic’s Board of Directors and Entropic’s Financial Advisor” of this joint proxy statement/prospectus. For purposes of this analysis, Barclays excluded amortization of acquired intangibles, stock-based compensation and other non-recurring charges. The after-tax unlevered free cash flows were calculated by taking the tax-affected earnings before interest and tax, adding depreciation and amortization, subtracting capital expenditures and adjusting for changes in working capital. The residual value of Entropic at the end of the forecast period, or “terminal value,” was estimated by selecting a range of perpetuity growth rates of 4.0% to 6.0%, which range was derived by Barclays utilizing its professional judgment and experience, taking into account the financial forecasts and market expectations regarding long-term growth of gross domestic product and inflation, and applying such range to the management projections. The range of after-tax discount rates of 12.5% to 17.5% was selected based on an analysis of the weighted average cost of capital of Entropic and the comparable companies used in Entropic’s “Comparable Company Analysis” above. Barclays then calculated a range of implied value per share of Entropic common stock by taking estimated equity value using the discounted cash flow method and dividing such amount by the fully diluted number of shares, calculated using the treasury stock method, of Entropic common stock as of January 29, 2015.

This analysis implied a range of value per share of Entropic common stock of $1.90 to $2.83. Barclays noted that on the basis of the discounted cash flow analysis, the $3.01 implied value of the merger consideration

 

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per share of Entropic common stock was above the range of implied value per share of Entropic common stock calculated on a standalone basis.

Other Factors

Barclays also noted certain additional factors that were not considered part of Barclays’ financial analyses with respect to its fairness determination but were referenced for informational purposes, including among other things the following:

 

    Research Analysts Price Targets Analysis

Barclays considered research analysts’ per share price targets for Entropic common stock which were publicly available from FactSet, of which there were six. The research analysts’ per share price targets for Entropic common stock ranged from $2.75 to $5.00. The publicly available per share price targets published by securities research analysts do not necessarily reflect the current market trading prices for Entropic common stock and these estimates are subject to uncertainties, including future financial performance of Entropic and future market conditions. Barclays then discounted such research analysts’ per share price targets to present value using a discount rate of 15%, which is the midpoint of the range of after-tax discount rates used for the discounted cash flow analysis. The present value of the research analysts’ per share price targets for Entropic common stock ranged from $2.39 to $4.35.

 

    Historical Share Price Analysis

To illustrate the trend in the historical trading prices of Entropic common stock, Barclays considered historical data with regard to the trading prices of Entropic common stock over the 52 weeks prior to the announcement of the proposed transaction. During such period, the trading price of Entropic common stock ranged from $2.15 to $4.80.

 

    Premiums Paid Analysis

In order to assess the premium offered to the stockholders of Entropic in the proposed transaction relative to the premiums offered to stockholders in other transactions, Barclays reviewed the premiums paid in all global technology merger and acquisition transactions (completed and pending) valued between $100 million and $1 billion from 2010 to 2015, of which there were 124 in total, as well as all global technology merger and acquisition transactions (completed and pending) valued between $100 million and $500 million from 2010 to 2015, of which there were 91 in total. For each of the transactions, Barclays calculated the premium per share paid by the acquirer by comparing the announced transaction value per share to the target company’s: (i) closing price on the last trading day prior to the announcement of the transaction; and (ii) average closing price for the 30 calendar days prior to the announcement of the transaction. The results of this premiums paid analysis are summarized below:

 

     1st Quartile     Mean     Median     3rd Quartile  

Transactions Between $100mm and $1bn

        

1-Day Prior to Announcement

     19.7     38.1     31.2     43.9

30-Day Average Prior to Announcement

     23.5     41.0     34.6     47.8

Transactions Between $100mm and $500mm

        

1-Day Prior to Announcement

     20.8     41.5     32.0     49.6

30-Day Average Prior to Announcement

     23.8     45.1     35.9     51.3

The reasons for and the circumstances surrounding each of the transactions analyzed in the premiums paid analysis were diverse and there are inherent differences in the business, operations, financial conditions and prospects of Entropic and the companies included in the premiums paid analysis. Accordingly, Barclays believed that a purely quantitative premiums paid analysis would not be particularly meaningful in the context of considering the proposed transaction. Barclays therefore made qualitative judgments concerning the differences between the characteristics of the selected transactions and the proposed transaction which would affect the acquisition values of the target

 

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companies and Entropic. Based upon these judgments, Barclays selected a range of premiums to (1) the closing price of Entropic common stock on February 2, 2015, the last trading day prior to the announcement of the proposed transaction and (2) the 30 trading day average of the closing prices of Entropic common stock, ending February 2, 2015, the last trading day prior to the announcement of the proposed transaction, to calculate ranges of implied value per share of Entropic common stock. The following summarizes the result of these calculations:

 

     Selected Premium Range    Implied Value Per Share of
Entropic common stock

1-Day Price

   19.0% – 44.0%    $3.17 – $3.83

30-Day Average

   23.0% – 48.0%    $3.08 – $3.70

MaxLinear

The following is a summary of the financial analyses used by Barclays in preparing its standalone valuation analysis of MaxLinear.

Comparable Company Analysis

In order to assess how the public market values shares of similar publicly traded companies, Barclays reviewed and compared specific financial and operating data relating to MaxLinear, with selected semiconductor companies that Barclays, based on its experience in the semiconductor industry, deemed comparable to MaxLinear. The companies that Barclays selected as comparable to MaxLinear were:

Broadcom Corp.

Entropic Communication, Inc.

Marvell Technology Group Ltd.

Silicon Laboratories Inc.

Barclays calculated and compared various financial multiples and ratios of MaxLinear, and those of the respective selected comparable companies. As part of its comparable company analysis with respect to MaxLinear, Barclays calculated and analyzed each company’s ratio of its current stock price to its calendar year 2014 and 2015 estimated earnings per share (commonly referred to as a price earnings ratio, or P/E), and each company’s enterprise value as a multiple of its calendar year 2014 and 2015 estimated revenue, and its calendar year 2014, 2015 and 2016 estimated EBITDA. The enterprise value of each company was obtained by adding its short and long-term debt to the sum of the market value of its common equity, calculated as fully diluted equity value, using the treasury stock method, based on closing stock prices on February 2, 2015, the value of any preferred stock (at liquidation value), the value of any pension liabilities and the book value of any minority interest, and subtracting its cash, cash equivalents and liquid investments. All of these calculations were performed, and based on publicly available financial data (including FactSet) and closing prices, as of February 2, 2015, the last trading date prior to the delivery of Barclays’ opinion. The results of this comparable company analysis for MaxLinear are summarized below:

 

     EV / Revenue      EV / EBITDA      P / E  
     CY 2014E      CY 2015E      CY 2014E      CY 2015E      CY 2016E      CY 2014E      CY 2015E  

High

     2.80x         2.64x         13.1x         11.9x         16.6x         22.1x         20.1x   

Mean

     1.93x         1.89x         10.7x         9.7x         11.3x         16.6x         17.0x   

Median

     2.08x         2.05x         10.4x         9.4x         10.6x         14.0x         17.0x   

Low

     0.77x         0.82x         8.6x         8.3x         7.5x         13.6x         13.7x   

Barclays selected the comparable companies listed above because of similarities in one or more business or operating characteristics with MaxLinear. However, because no selected comparable company is exactly the same as MaxLinear, Barclays believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the comparable company analysis. Accordingly, Barclays also made qualitative judgments

 

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concerning differences between the business, financial and operating characteristics and prospects of MaxLinear and the comparable companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degree of operational risk between MaxLinear and the companies included in the comparable company analysis. Based upon these judgments, Barclays selected a range of multiples for MaxLinear and applied such ranges to the management projections of MaxLinear on a standalone basis to calculate ranges of implied value per share of MaxLinear Class A common stock. The management projections of MaxLinear are set forth in the section captioned “Certain Unaudited Prospective Financial Information Reviewed by MaxLinear’s Board of Directors and MaxLinear’s Financial Advisor” of this joint proxy statement/prospectus. The results of these calculations are summarized as follows:

 

     Selected Multiple Range    Implied Value Per Share of
MaxLinear Class A common stock

EV / Revenue CY 2014E

   1.50x – 2.20x    $6.60 – $8.70

EV / Revenue CY 2015E

   1.40x – 2.10x    $6.87 – $9.24

EV / EBITDA CY 2014E

   9.0x – 12.0x    $5.67 – $6.89

EV / EBITDA CY 2015E

   9.0x – 12.0x    $6.75 – $8.31

EV / EBITDA CY 2016E

   8.0x – 11.0x    $8.47 – $10.83

P / E CY 2014E

   16.0x – 24.0x    $6.04 – $9.05

P / E CY 2015E

   16.0x – 24.0x    $6.88 – $10.32

Barclays noted that on the basis of the comparable company analysis with respect to MaxLinear, the closing price of $8.24 per share of MaxLinear Class A common stock on February 2, 2015, the last trading day prior to the announcement of the transaction, was (i) above the range of implied value per share of MaxLinear Class A common stock calculated on a standalone basis using estimated calendar year 2014 EBITDA, (ii) below the range of implied value per share of MaxLinear Class A common stock calculated on a standalone basis using estimated calendar year 2016 EBITDA and (iii) within the ranges of implied value per share of MaxLinear Class A common stock calculated on a standalone basis using estimated calendar years 2014 and 2015 revenue, estimated calendar year 2015 EBITDA and estimated calendar years 2014 and 2015 earnings per share.

Discounted Cash Flow Analysis

In order to estimate the present value of MaxLinear Class A common stock, Barclays also performed a discounted cash flow analysis of MaxLinear. To calculate the estimated enterprise value of MaxLinear using the discounted cash flow method, Barclays added (i) MaxLinear’s projected after-tax unlevered free cash flows for fiscal years 2015 through 2017 based on management projections to (ii) the “terminal value” of MaxLinear as of the end of fiscal year 2017, and discounted such amount to its present value (as of February 2, 2015) using a range of selected discount rates. The management projections of MaxLinear are set forth in the section captioned “Certain Unaudited Prospective Financial Information Reviewed by MaxLinear’s Board of Directors and MaxLinear’s Financial Advisor” of this joint proxy statement/prospectus. For purposes of this analysis, Barclays excluded stock-based compensation and other non-recurring charges. The after-tax unlevered free cash flows were calculated by taking the tax-affected earnings before interest and tax, adding depreciation and amortization, subtracting capital expenditures and certain purchases of intellectual property, and adjusting for changes in working capital. The residual value of MaxLinear at the end of the forecast period, or “terminal value,” was estimated by selecting a range of perpetuity growth rates of 4.0% to 6.0%, which range was derived by Barclays utilizing its professional judgment and experience, taking into account the financial forecasts and market expectations regarding long-term growth of gross domestic product and inflation, and applying such range to the management projections. The range of after-tax discount rates of 12.5% to 17.5% was selected based on an analysis of the weighted average cost of capital of MaxLinear and the comparable companies used in MaxLinear’s “Comparable Company Analysis” above. Barclays then calculated a range of implied value per share of MaxLinear Class A common stock by taking estimated equity value using the discounted cash flow method and dividing such amount by the fully diluted number of shares, calculated using the treasury stock method, of MaxLinear Class A common stock as of December 17, 2014.

 

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This analysis implied a range of value per share of MaxLinear Class A common stock of $10.12 to $19.30. Barclays noted that on the basis of the discounted cash flow analysis, the closing price of $8.24 per share of MaxLinear Class A common stock on February 2, 2015, the last trading day prior to the announcement of the transaction, was below the range of implied value per share of MaxLinear Class A common stock calculated on a standalone basis.

Other Factors

Barclays also noted certain additional factors that were not considered part of Barclays’ financial analyses with respect to its fairness determination but were referenced for informational purposes, including among other things the following:

 

    Research Analysts Price Targets Analysis

Barclays considered research analysts’ per share price targets for MaxLinear Class A common stock which were publicly available from FactSet, of which there were seven. The research analysts’ per share price targets for MaxLinear Class A common stock ranged from $9.00 to $11.00. The publicly available per share price targets published by securities research analysts do not necessarily reflect the current market trading prices for MaxLinear Class A common stock and these estimates are subject to uncertainties, including future financial performance of Entropic and future market conditions. Barclays then discounted such research analysts’ per share price targets to present value using a discount rate of 15%, using the midpoint of the range of after tax discount rates used for the discounted cash flow analysis. The present value of the research analysts’ per share price targets for MaxLinear Class A common stock ranged from $7.83 to $9.57.

 

    Historical Share Price Analysis

To illustrate the trend in the historical trading prices of MaxLinear Class A common stock, Barclays considered historical data with regard to the trading prices of MaxLinear Class A common stock over the 52 weeks prior to the announcement of the proposed transaction. During such period, the trading price of MaxLinear Class A common stock ranged from $6.25 to $10.80.

Exchange Ratio

Based upon the ranges of implied per share values of Entropic common stock and MaxLinear Class A common stock derived in the above analyses, Barclays derived implied exchange ratios of MaxLinear Class A common stock per share of Entropic common stock.

Comparable Company Analysis

As part of its comparable company analysis with respect to each of Entropic and MaxLinear described above, Barclays derived ranges of implied value per share of Entropic common stock and MaxLinear Class A common stock respectively, in each case, calculated on a standalone basis using estimated calendar year 2014 and 2015 revenue and estimated calendar year 2015 and 2016 EBITDA. Utilizing these ranges of implied value per share of Entropic common stock and MaxLinear Class A common stock, Barclays then derived ranges of implied exchange ratios of MaxLinear Class A common stock per share of Entropic common stock. The low end of each range of implied exchange ratios was calculated by dividing (i) the low end of the range of implied value per share of Entropic common stock less the cash portion of the merger consideration of $1.20 per share of Entropic common stock by (ii) the high end of the range of implied value per share of MaxLinear Class A common stock. The high end of each range of implied exchange ratios was calculated by dividing (i) the high end of the range of implied value per share of Entropic common stock less the cash portion of the merger consideration of $1.20 per share of Entropic common stock by (ii) the low end of the range of implied value per share of MaxLinear Class A common stock. Barclays then took the average of each range of implied exchange

 

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ratio and, based on Barclays’ judgment, added a 20% premium and subtracted a 20% discount to derive the following ranges of implied exchange ratio per share of Entropic common stock:

 

     Implied Exchange Ratio

EV / Revenue CY 2014E

   0.2100x – 0.3151x

EV / Revenue CY 2015E

   0.1614x – 0.2421x

EV / EBITDA CY 2015E

   0.1908x – 0.2862x

EV / EBITDA CY 2016E

   0.0649x – 0.0973x

Barclays noted that the exchange ratio to be offered as part of the merger consideration to stockholders of Entropic of 0.2200 of a share of MaxLinear Class A common stock per share of Entropic common stock was (i) above the range of implied exchange ratio calculated based on the comparable company analysis using estimated calendar year 2016 EBITDA and (ii) within the ranges of implied exchange ratios calculated based on the comparable company analysis using estimated calendar years 2014 and 2015 revenue and estimated calendar year 2015 EBITDA.

Discounted Cash Flow Analysis

As part of its discounted cash flow analysis with respect to each of Entropic and MaxLinear described above, Barclays derived ranges of implied value per share of Entropic common stock and MaxLinear Class A common stock respectively. Utilizing these ranges of implied value per share of Entropic common stock and MaxLinear Class A common stock, Barclays then derived a range of implied exchange ratios of MaxLinear Class A common stock per share of Entropic common stock. The low end of the range of implied exchange ratios was calculated by dividing (i) the low end of the range of implied value per share of Entropic common stock less the cash portion of the merger consideration of $1.20 per share of Entropic common stock by (ii) the high end of the range of implied value per share of MaxLinear Class A common stock. The high end of the range of implied exchange ratios was calculated by dividing (i) the high end of the range of implied value per share of Entropic common stock less the cash portion of the merger consideration of $1.20 per share of Entropic common stock by (ii) the low end of the range of implied value per share of MaxLinear Class A common stock. Barclays then took the average of the range of implied exchange ratio and added a 20% premium and subtracted a 20% discount to derive the following range of implied exchange ratio per share of Entropic common stock:

Implied Exchange Ratio

0.0790x – 0.1185x

Barclays noted that the exchange ratio to be offered as part of the merger consideration to stockholders of Entropic of 0.2200 of a share of MaxLinear Class A common stock per share of Entropic common stock was above the range of implied exchange ratio calculated based on the discounted cash flow analysis.

Precedent Transaction Analysis

As part of its precedent transaction analysis with respect to Entropic described above, Barclays derived ranges of implied value per share of Entropic common stock calculated on a standalone basis using LTM revenue and FTM revenue. Utilizing these ranges of implied value per share of Entropic common stock, Barclays then derived ranges of implied exchange ratios of MaxLinear Class A common stock per share of Entropic common stock. The low end of each range of implied exchange ratios was calculated by dividing (i) the low end of the range of implied value per share of Entropic common stock less the cash portion of the merger consideration of $1.20 per share of Entropic common stock by (ii) the high end of the range of implied value per share of MaxLinear Class A common stock on a standalone basis derived from the comparable company analysis described above using unaudited calendar year 2014 revenue (in the case of LTM revenue for Entropic) and using estimated calendar year 2015 revenue (in the case of FTM revenue for Entropic). The high end of each range of implied exchange ratios was calculated by dividing (i) the high end of the range of implied value per share of Entropic common stock less the cash portion of the merger consideration of $1.20 per share of Entropic common stock by (ii) the low end of the range of implied value per share of MaxLinear Class A common stock

 

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on a standalone basis derived from the comparable company analysis described above using estimated calendar year 2014 revenue (in the case of LTM revenue for Entropic) and using estimated calendar year 2015 revenue (in the case of FTM revenue for Entropic). Barclays then took the average of each range of implied exchange ratio and added a 20% premium and subtracted a 20% discount to derive the following ranges of implied exchange ratio per share of Entropic common stock:

 

     Implied Exchange Ratio

EV / LTM Revenue

   0.2129x – 0.3193x

EV / FTM Revenue

   0.1911x – 0.2867x

Barclays noted that the exchange ratio to be offered as part of the merger consideration to stockholders of Entropic of 0.2200 of a share of MaxLinear Class A common stock per share of Entropic common stock was within the ranges of implied exchange ratios calculated based on the precedent transaction analysis using LTM revenue and FTM revenue.

Other Factors

Barclays also noted certain additional factors that were not considered part of Barclays’ financial analyses with respect to its fairness determination but were provided to the Entropic Board of Directors for informational purposes, including among other things the following:

 

    Contribution Analysis

Barclays performed a relative contribution analysis of Entropic and MaxLinear in which Barclays reviewed selected estimated future financial information for Entropic and MaxLinear to determine Entropic’s and MaxLinear’s relative contribution to the combined company after the merger taking into account the cash portion of the merger consideration of $1.20 per share of Entropic common stock to be paid by MaxLinear to stockholders of Entropic common stock. Barclays analyzed Entropic’s and MaxLinear’s relative contribution to estimated revenue, estimated gross profit, estimated adjusted operating income and estimated adjusted net income of the combined company for calendar years 2015 and 2016. Financial data of Entropic and MaxLinear were based on estimates provided by the respective managements of Entropic and MaxLinear, respective company filings of Entropic and MaxLinear, and general financial market research. Based on the relative contributions of Entropic and MaxLinear to the combined company calculated in the contribution analysis, Barclays determined implied exchange ratios of MaxLinear Class A common stock per share of Entropic common stock. The following table reflects the results of this analysis:

 

     Implied Exchange Ratio  

CY 2015E Revenue

     0.399x   

CY 2016E Revenue

     0.288x   

CY 2015E Gross Profit

     0.347x   

CY 2016E Gross Profit

     0.252x   

CY 2015E Adjusted Operating Income

     0.229x   

CY 2016E Adjusted Operating Income

     0.045x   

CY 2015E Adjusted Net Income

     0.329x   

CY 2016E Adjusted Net Income

     0.080x   

Average

     0.246x   

 

    Historical Exchange Ratio Analysis

To provide background and perspective with respect to the historical share prices of Entropic common stock and MaxLinear Class A common stock, Barclays reviewed the daily historical closing share prices of Entropic common stock and MaxLinear Class A common stock for the period from January 31, 2014 to February 2, 2015. Barclays analyzed the ratio of the daily closing share price for

 

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Entropic common stock (adjusted for the cash portion of the merger consideration of $1.20 per share of Entropic common stock to be paid by MaxLinear to the holders of Entropic common stock in the merger) to the corresponding closing share price of MaxLinear Class A common stock during such period. In addition, Barclays reviewed the implied relative exchange ratio of the closing share price for Entropic common stock (adjusted for the cash portion of the merger consideration of $1.20 per share of Entropic common stock to be paid by Maxlinear to the holders of Entropic common stock in the merger) and the closing share price of MaxLinear Class A common stock based on the one-day, one-month average, three-month average, six-month average and one-year average prices, respectively, as of February 2, 2015. The following table reflects the results of this analysis:

 

     Implied Exchange Ratio  

February 2, 2015

     0.177x   

One-Month Average

     0.161x   

Three-Month Average

     0.166x   

Six-Month Average

     0.174x   

One-Year Average

     0.219x   

General

Barclays is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. Entropics’s board of directors selected Barclays because of its qualifications, reputation and experience in the valuation of businesses and securities in connection with mergers and acquisitions generally, as well as substantial experience in transactions comparable to the proposed transaction.

Barclays is acting as financial advisor to Entropic in connection with the proposed transaction. As compensation for its services in connection with the proposed transaction, Entropic has agreed to pay Barclays certain transaction related fees, which are currently estimated to be approximately $5.1 million, of which $500,000 became payable upon the delivery of Barclays’ opinion, and the remainder of which will become payable solely upon the consummation of the proposed transaction. In addition, Entropic has agreed to reimburse Barclays for its reasonable expenses incurred in connection with the proposed transaction and to indemnify Barclays for certain liabilities that may arise out of its engagement by Entropic and the rendering of Barclays’ opinion. Barclays has performed various investment banking and financial services for Entropic in the past, and expects to perform such services in the future, and has received, and expects to receive, customary fees for such services. Specifically, in the past two years, Barclays has performed the following investment banking and financial services: (i) coordinated Entropic’s open-market share repurchase program as part of Entropic’s $30 million stock buy-back initiated in September 2013 and (ii) provided defense advisory services in connection with a potential shareholder activism campaign initiated in September 2013. Barclays has received an aggregate of approximately $90,000 in fees from Entropic for the services performed in the past two years, exclusive of this transaction. Barclays has not provided any investment banking or financial services to MaxLinear during the past two years.

Barclays and its affiliates engage in a wide range of businesses from investment and commercial banking, lending, asset management and other financial and non-financial services. In the ordinary course of its business, Barclays and affiliates may actively trade and effect transactions in the equity, debt and/or other securities (and any derivatives thereof) and financial instruments (including loans and other obligations) of Entropic and MaxLinear for its own account and for the accounts of its customers and, accordingly, may at any time hold long or short positions and investments in such securities and financial instruments.

 

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Certain Unaudited Prospective Financial Information Reviewed by Entropic’s Board of Directors and Entropic’s Financial Advisor

As a matter of course, Entropic does not publicly disclose long-term projections of future financial results other than limited short-term guidance concerning select financial and operating metrics disclosed as part of its quarterly earnings announcements. In connection with its evaluation of the merger, Entropic’s board of directors considered certain unaudited, non-public financial projections with respect to Entropic as a standalone company for each of the years ending December 31, 2015, 2016, 2017, 2018, and 2019 and certain unaudited, non-public financial projections with respect to MaxLinear as a standalone company for each of the years ending December 31, 2015, 2016, and 2017. The above referenced financial projections with respect to Entropic were prepared in January 2015 and provided to Entropic’s financial advisor on January 28, 2015 and the above referenced financial projections with respect to MaxLinear were provided to Entropic’s financial advisor on January 29, 2015. Because the financial projections set forth below were prepared on a standalone basis, they do not give effect to the proposed merger or any synergies expected to result from the acquisition. A summary of these financial projections are set forth below.

The inclusion of the financial projections below should not be deemed an admission or representation by Entropic, MaxLinear, or any of their respective officers, directors, affiliates, advisors, or other representatives with respect to such projections. The financial projections included below are not included to influence your views on the merger described in this joint proxy statement/prospectus but solely to provide stockholders access to certain non-public information that was provided to Entropic’s board of directors in connection with its evaluation of the merger and to Entropic’s financial advisor to assist with its financial analyses as described in the section entitled “Opinion of Entropic’s Financial Advisor.” The information from the financial projections included below should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding Entropic and MaxLinear contained in each company’s respective public filings with the SEC.

The unaudited prospective financial information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, or GAAP. Neither the independent registered public accounting firm of MaxLinear and Entropic nor any other independent accountant has audited, reviewed, compiled, examined or performed any procedures with respect to the accompanying unaudited prospective financial information for the purpose of its inclusion herein, and accordingly, neither the independent registered public accounting firm of MaxLinear and Entropic nor any other independent accountant expresses an opinion or provides any form of assurance with respect thereto for the purpose of this joint proxy statement/prospectus. The report of the independent registered public accounting firm of MaxLinear contained in the Annual Report of MaxLinear on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this joint proxy statement/prospectus, relates to the historical financial information of MaxLinear. The report of the independent registered public accounting firm of Entropic contained in the Annual Report of Entropic on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this joint proxy statement/prospectus, relates to the historical financial information of Entropic.

The financial projections are in general prepared for internal use and are subjective in many respects. As a result, these financial projections are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Although Entropic and MaxLinear believe their respective assumptions (as set forth below) to be reasonable, all financial projections are inherently uncertain, and Entropic and MaxLinear expect that differences will exist between actual and projected results. Although presented with numerical specificity, the financial projections reflect numerous variables, estimates, and assumptions made by the managements of Entropic or MaxLinear, as applicable, at the time they were prepared, and also reflect general business, economic, market, and financial conditions and other matters, all of which are difficult to predict and many of which are beyond Entropic’s and MaxLinear’s control. In addition, the financial projections cover multiple years, and this information by its nature becomes subject to greater uncertainty with each

 

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successive year. Accordingly, there can be no assurance that the estimates and assumptions made in preparing the financial projections will prove accurate or that any of the financial projections will be realized.

The financial projections with respect to Entropic included certain assumptions relating to, among others things, (i) Entropic’s expected growth in product revenues from consumer hardware device manufacturers in each fiscal year ending prior to or on December 31, 2017, primarily driven by revenue from emerging device categories such as MoCA 2.0 enabled Ethernet to Coax adapters, data gateways and over-the-top video streaming devices, and from Entropic’s expansion into additional functionality through the development and introduction of new products; (ii) Entropic’s expected revenue declines in the Direct Broadcast Satellite Outdoor Unit business as a result of the industry transition from Analog to Digital CSS technology and the competitive landscape in Digital CSS; (iii) Entropic’s expected long-term growth in the emerging Ethernet over Coax business supporting Broadband Access deployments; (iv) Entropic’s expected revenue declines in the set-top-box System-on-a-Chip (STB SOC) business as a result of the company’s decision to cease development of future products for that market; (v) Entropic’s expected operating expenses, including the assumption that no additional headcount would be necessary to support ongoing product development, sales and marketing; (vi) an assumed income tax rate of 0% through the forecast horizon; and (vii) assumed interest earned on cash balances of 0.8%. Entropic assumed a blended 5% growth in revenues from all products and 4% growth in expenses for the fiscal year ending December 31, 2018, and 9% revenue growth and 5% expense growth in the year ended December 31, 2019. Furthermore, the financial projections with respect to Entropic contain assumptions regarding the timing of the transition from Analog Channel Switching technology (CSS) to Digital CSS and corresponding declines in connectivity revenues, the timing of the adoption of MoCA in emerging device categories and in broadband access applications, if at all, and the timing of the ending of STB SOC revenue streams. Additionally, in preparing such financial projections Entropic management assumed that revenue growth for the fiscal years ending December 31, 2018 and December 31, 2019 would come primarily from growth in the emerging product categories but also assumed that such revenue would be offset by continued erosion in the STB SOC business. Because of the evolving nature of consumer hardware technology and potential availability of replacement technologies, there is substantial uncertainty as to the timing of new technology deployment and the ability of Entropic to launch new products that gain customer acceptance and compete effectively. Entropic did not risk adjust any of the assumptions or projections based upon probability of success in launching new products or maintaining revenue for legacy products. The financial projections with respect to MaxLinear included the assumptions discussed under the section entitled “Certain Unaudited Prospective Financial Information Reviewed by MaxLinear’s Board of Directors and MaxLinear’s Financial Advisor” above.

The financial projections are subject to many risks and uncertainties and you are urged to review (i) the section entitled “Risk Factors” beginning on page 34 of this joint proxy statement/prospectus for a description of risk factors relating to the merger; (ii) Entropic’s most recent SEC filings for a description of risk factors with respect to Entropic’s businesses and (iii) MaxLinear’s most recent SEC filings for a description of risk factors with respect to MaxLinear’s businesses. You should also read the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 47 of this joint proxy statement/prospectus for additional information regarding the risks inherent in forward-looking information such as the financial projections.

The inclusion of the financial projections herein should not be regarded as an indication that Entropic, MaxLinear, or any of their respective affiliates or representatives considered or consider the financial projections to be necessarily indicative of actual future events, and the financial projections should not be relied upon as such. The financial projections do not take into account any circumstances or events occurring after the date they were prepared. Neither Entropic nor MaxLinear intends to, and each disclaims any obligation to, update, correct, or otherwise revise the financial projections to reflect circumstances existing or arising after the date such financial projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions or other information underlying the financial projections are shown to be in error. Furthermore, the financial projections do not take into account the effect of any failure of the merger to be consummated and should not be viewed as accurate or continuing in that context.

 

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The financial projections set forth below include earnings before interest, taxes, depreciation and amortization (EBITDA) and earnings before interest and taxes (EBIT), which are non-GAAP measures. The operating expenses included in EBITDA and EBIT exclude share-based compensation expense, amortization of purchased intangibles, and other one-time expenses that would be included in operating expenses under GAAP. Additionally, as part of the financial projections, Entropic’s management calculated unlevered free cash flow, which is a non-GAAP measure defined as unlevered net income, plus depreciation and amortization expense, less capital expenditures, and plus or minus, as applicable, net changes in working capital. Due to the forward-looking nature of the financial projections, specific quantifications of the amounts that would be required to reconcile such projections to GAAP measures are not available. Entropic believes that there is a degree of volatility with respect to certain GAAP measures, and certain adjustments made to arrive at the relevant non-GAAP measures, which preclude Entropic from providing accurate forecasted non-GAAP reconciliations.

In light of the foregoing factors and the uncertainties inherent in financial projections, stockholders are cautioned not to place undue reliance, if any, on the financial projections.

The following table presents selected summary Entropic financial projections prepared by Entropic management and made available to the Entropic board of directors and Entropic’s financial advisor. The financial information set forth in the line items for revenues, depreciation and amortization, EBIT, taxes, and capital expenditures were prepared by Entropic management. The financial information set forth in the line items for EBITDA, unlevered net income, change in working capital, and free cash flow were extrapolated by Entropic’s management, in consultation with Barclays.

 

     2015E     2016E     2017E     2018E     2019E  
  

 

(in millions)

  

Revenues

   $ 180.4      $ 166.7      $ 163.4      $ 171.3      $ 185.9   

EBITDA

   $ 17.6      $ 8.9      $ 6.9      $ 13.2      $ 22.9   

Less: Depreciation and Amortization

     5.3        3.9        3.9        4.5        5.4   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBIT

$ 12.3    $ 5.0    $ 3.0    $ 8.7    $ 17.5   

Taxes

  0.4      0.4      0.4      0.4      0.4   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unlevered Net Income

$ 11.9    $ 4.6    $ 2.6    $ 8.3    $ 17.1   

Depreciation and Amortization

  5.3      3.9      3.9      4.5      5.4   

Capital Expenditures

  (2.0   (2.0   (4.0   (4.0   (4.0

Change in Working Capital(1)

  (9.9   (0.8   (0.1   (3.1   (3.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unlevered Free Cash Flow

$ 5.3    $ 5.7    $ 2.4    $ 5.7    $ 15.4   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) For each applicable period, calculated based on the sum of changes in operating assets and liabilities for such period, as set forth in the consolidated statement of