Navitas Semiconductor (“the Company” or “Navitas”), the industry leader in GaN power integrated circuits (“ICs”), and its partner Live Oak Acquisition Corp. II (“Live Oak II”) (NYSE: LOKB), a publicly-traded special-purpose acquisition company, provided certain updates related to their proposed business combination, which values the combined entity at a pro forma equity value of $1.04 billion.
Gallium nitride (GaN) is a next-generation semiconductor technology that runs up to 20x faster than legacy silicon and enables up to 3x more power and 3x faster charging in half the size and weight. Navitas’ GaNFast power ICs integrate GaN power and drive plus protection and control to deliver simple, small, fast and efficient performance. With over 130 patents issued or pending, and significant trade secrets including a proprietary process design kit (PDK), Navitas believes it has a multi-year lead in next-generation GaN power ICs.
Since the original announcement of the business combination on May 7th, 2021, the number of OEM chargers in mass production containing Navitas GaNFast power ICs has increased from 75 to more than 140, more than all GaN competitors combined, based on Navitas estimates. The number of GaNFast power ICs shipped has also increased, from over 18 million to over 25 million.
In addition to previously disclosed tier-1 customers such as Dell, Amazon, LG Electronics, Xiaomi and Belkin, Navitas recently showcased testimonials from partners across all target end-markets. This includes OPPO in the fast-charger market for smartphones, Lenovo in mobile and data center, Enphase Energy in the solar market, and Electric Vehicle system supplier Brusa Elektronik AG.
Increased PIPE:
At the time that Navitas and Live Oak II entered into the definitive agreement for the business combination, Live Oak II also entered into subscription agreements for an oversubscribed and upsized $145mm private placement of Class A common stock in Live Oak II at $10.00 per share (the “PIPE”), from a diversified group of institutional investors. On August 17, 2021, Live Oak II entered into a subscription agreement with an affiliate of Atlantic Bridge, an existing investor in Navitas for an additional $10mm of Class A common stock to be issued in the PIPE, on the same terms as the existing PIPE investors.
Redemption Backstop:
Live Oak II has also entered into a redemption backstop agreement with Encompass Capital Advisors LLC (“Encompass”). Encompass is an institutional investment manager, primarily focused on investing across the energy eco-chain.
In the agreement, and subject to certain conditions and including limitations on pricing, Encompass has agreed to direct certain fund entities and/or managed accounts, for which it has investment discretion to offer to purchase up to 2,000,000 shares of LOKB Class A common stock prior to the closing of the business combination. Encompass has also agreed to not redeem any shares of Class A Common Stock in connection with the business combination, and to vote any shares of Class A Common Stock held by Encompass as of the record date for the special meeting in favor of the business combination and all other proposals to be presented at the special meeting, provided that such proposals have been approved and recommended by the LOKB Board for approval by LOKB’s stockholders.
“We are thrilled to be progressing through the business combination with Live Oak, and pleased that we can accommodate an additional commitment from long-term investor Atlantic Bridge. We welcome Encompass and their support of our business, particularly given their focus on the energy eco-system, including renewables and electric vehicle end markets,” said Gene Sheridan, co-founder and CEO of Navitas. “This kind of support means that we can focus on new generations of products, new markets, and new customers as part of our mission to ‘Electrify Our World’ profitably and sustainably”.
