PTK Acquisition Corporation
PROPOSED BUSINESS COMBINATION: Valens Semiconductor
ENTERPRISE VALUE: $894 million
ANTICIPATED SYMBOL: VLN
PTK Acquisition Corporation proposes to combine with Valens, a premier provider of high-speed connectivity solutions for the audio-video and automotive markets.
Valens chipsets transmit video and data at industry-leading multi-gigabit bandwidth over long-reach, space-efficient wiring infrastructure, guaranteeing error-free links with zero latency – all at the lowest total system cost. The company’s technology was selected as the baseline for MIPI A-PHY, the new global automotive video connectivity standard, giving the company a significant first-mover advantage.
In audio-video, Valens is a market leader in long-reach connectivity, where its HDBaseT technology is a leading industry standard. This established business is experiencing strong growth fueled by a surge in demand for video conferencing, hybrid education, and remote healthcare.
TRANSACTION
- The transaction is expected to deliver approximately $240 million of gross proceeds, including up to $115 million of cash held in PTK’s trust account (assuming no redemptions)
- $125 million from a fully subscribed PIPE offering led by an established global institutional investor, as well as by Mediatek, a leading global semiconductor company for mobile, home and automotive.
- PTK’s sponsor will also be participating in the PIPE offering.
- This business combination values the post-transaction Valens at an initial pro-forma equity value of approximately $1.16 billion.
- Valens shareholders will continue to hold their existing equity in the combined company.
- Following completion of the transaction, Valens will continue to be led by its management team, with Gideon Ben-Zvi as CEO, Dror Heldenberg as CFO, and all six Valens founders retaining their senior management or board positions.
- Ker Zhang from PTK will join the Valens board of directors upon closing of the transaction.
PIPE
- $125 million from a fully subscribed PIPE purchased at $10.00 per share.
- Led by an established global institutional investor, as well as by Mediatek
LOCKUP
- 6-month lock-up for shares held by Valens existing shareholders
SPONSOR EARNOUT
- 35% of founder shares will be unvested at the time of the merger
- 10% will vest if share price is greater than or equal to $12.00 over any 20 trading days within any 30 day period in the first 36
months following the combination - 12.5% will vest if the share price is greater than or equal to $12.50 over any 20 trading days within any 30 day period in the first 36 months following the
combination - 12.5% will vest if the share price is greater than or equal to $15.00 over any 20 trading days within any 30 day period in the 48 months following the combination
- In the event of a Valens change in control transaction within three years following the Closing, fifty percent of the Earnout Shares not earlier released will be released from such transfer restrictions if the effective price per share to be received by Valens shareholders in such change in control transaction is at least $11.25 per share.
- In the event of a Valens change in control transaction within four years following the Closing, one hundred percent of the Earnout Shares not earlier released will be released from such transfer restrictions if the effective price per share to be received by Valens shareholders in such change in control transaction is at least $12.50 per share.
- In addition, pursuant to the terms of the Sponsor Support Agreement, the Sponsor agreed to cancel warrants to purchase an aggregate of 370,000 shares of Valens ordinary shares effective as of the Closing.
NOTABLE CONDITIONS TO CLOSING
- The aggregate amount remaining in PTK’s trust account after taking into account all redemptions, plus the aggregate amount sold in the PIPE being equal to or greater than $215,000,000.
NOTABLE CONDITION TO TERMINATION
- by either PTK or Valens, if the transactions contemplated by the Business Combination Agreement shall not have been consummated on or prior to the Termination Date ( November 30, 2021)
ADVISORS
- BofA Securities is acting as exclusive financial advisor to Valens.
- Citigroup, BofA Securities and Oppenheimer are joint placement agents on the PIPE.
- Davis Polk & Wardwell LLP and Meitar Law Offices are serving as legal advisor for Valens in the U.S. and Israel, respectively.
- Financial Profiles, Inc. is serving as investor relations advisor for Valens.
- Goodwin Procter LLP and Goldfarb Seligman & Co. are serving as legal advisors to PTK in the U.S. and Israel, respectively.
- Winston & Strawn LLP is acting as legal advisor to Citigroup, BofA Securities and Oppenheimer.
MANAGEMENT & BOARD
Executive Officers
Peter Kuo, 48
Chief Executive Officer & Director
Peter Kuo, 48, will serve as Chief Executive Officer and Director following the completion of this offering. Mr. Kuo has served as a co-founding partner of Canyon Bridge Capital Partners, a private equity firm, since April 2017. Mr. Kuo was a Managing Director at Lazard Limited, where he advised clients on strategic M&A from June 2011 until March 2018. Mr. Kuo was a Managing Director at Cowen Inc. from March 2010 until May 2011 and Susquehanna International Group from June 2005 until December 2010. A Fulbright Scholar, Peter holds a JD from Harvard Law School and a BS in Foreign Service from Georgetown University.
Timothy Chen, 45
Chief Financial Officer & Director
Timothy Chen, 45, will serve as Chief Financial Officer and Director following the completion of this offering. Since February 1997 Mr. Chen has held numerous position with VIA Technologies, Inc., a leading innovator of PC silicon and platform technologies. Since February 2010, Mr. Chen has served as the Head of Global Sales & Marketing at VIA Technologies, Inc. Since February 2017 Mr. Chen has also served as the Chief Executive Officer of VIA China, a wholly owned subsidiary of VIA Technologies, Inc. Mr. Chen is also a World Economic Forum Young Global Leader and a Fellow of the China Fellowship Program and member of the Aspen Global Leadership Networks. Mr. Chen holds a B.S. in Industrial Engineering from the University of California at Berkley. Mr. Chen is also involved in social ventures, social media, premium content providers, hardware companies at the semiconductor & system level.
Ker Zhang, 57
Secretary & Director
Ker Zhang, 57, will serve as Secretary and Director following the completion of this offering. Mr. Zhang has been an entrepreneur in residence at Kleiner Perkins since February 2018. Mr. Zhang was Vice President and General Manager of CDMA Product and Development of Intel Corporation from October 2015 until February 2018. Mr. Zhang was Chief Executive Officer of VIA Telecom from April 2002 until it was acquired by Intel Corporation in October 2015. Mr. Zhang has been the Executive Chairman of privately-held Crossbar, Inc., since March 2019. Mr. Zhang earned his M.S. in Physics from the University of Massachusetts and his Ph.D. in Electrical Engineering from Worcester Polytechnic Institute.
Board of Directors
Charles Huang, 50
Independent Director
Mr. Huang has served as Chief Executive Officer of Indigo 7 Limited since February 2014. Since March 2011 Mr. Huang has also served as a co-founder of Blue Goji Corp, a maker of games and controllers. Prior to Blue Goji, Mr. Hui was Co-founder of American electronic entertainment company RedOctane, where he was the co-developer of the video game Guitar Hero. Mr. Huang holds a BA in Economics and Asian Studies from the University of California at Berkley.
John Hui, 64
Independent Director
Mr. Hui has served as Chief Strategy Officer of Foxconn since September 2010. Mr. Hui has also served as the Chief Executive Officer of Joui International since January 2015. Mr. Hui served as Chairman of the Board Of Directors of privately-held Smart Technologies from October 2016 until December 2018. Mr. Hui also served as the Chief Executive Officer of InFocus from September 2009 until June 2016. Mr. Hui holds a B.Sc. in Business from State University of New York at Buffalo and a Master of Business Administration from McMaster University.
Dr. Walden C. Rhines, 72
Independent Director
Dr. Rhines, 72, has served on the Board of Directors since January 2015. From 1995 until 2015, he served as a director of TriQuint. He is CEO Emeritus of Mentor, a Siemens Business and an electronic design automation company, having previously served as President and Chief Executive Officer of Mentor from its acquisition by Siemens Industry, Inc. in March 2017 until October 2018. He previously served as Chief Executive Officer of Mentor Graphics Corporation from 1993 and chairman of its board of directors from 2000 until the acquisition of Mentor Graphics by Siemens in 2017. Prior to joining Mentor Graphics, he spent 21 years at Texas Instruments, a semiconductor manufacturer, with his most recent position as the Executive Vice President of its Semiconductor Group with responsibility for its worldwide semiconductor business. Dr. Rhines also served as a director of Cirrus Logic, Inc., a semiconductor company, from 1995 to 2009, is a member of the board of Electronic System Design Alliance, a trade association for electronic design companies, and serves on the board of Semiconductor Research Corporation, a technology research consortium, and as a consultant to the Defense Advanced Research Projects Agency (DARPA), a research investment arm of the U.S. government. Dr. Rhines brings to the Board and its committees over 45 years of experience in the semiconductor industry, including substantial operating experience and management expertise as a CEO of a publicly traded technology company.