Lattice Semiconductor (LSCC) 'Background of the Merger' Shows Various Twists and Turns in Deal 1 1/2 Years in the Making

November 30, 2016 5:50 PM EST

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Lattice Semiconductor (NASDAQ: LSCC) released its preliminary proxy related to the November 3rd merger announcement with Canyon Bridge at $1.3 billion, or $8.30 per share in cash. The filing shows various firms were interested in buying the company over a nearly 1 1/2 year pursuit:

Background of the Merger

The Board and senior management team regularly review Lattice’s performance, future growth prospects and overall strategic direction, and consider potential opportunities to strengthen Lattice’s businesses and enhance stockholder value. These reviews have included consideration of a variety of strategic alternatives, including continuing to pursue Lattice’s current strategy and investments, potential changes to Lattice’s current strategy and investments, and potential strategic or financing transactions with third parties. The Board and senior management team evaluate these strategic alternatives based upon what they believe will create stockholder value, further Lattice’s strategic objectives, and enhance Lattice’s ability to serve customers, and based upon consideration of the potential benefits and risks of each of these alternatives in light of, among other things, the business environment, recent semiconductor industry consolidation trends and Lattice’s performance and competitive position.

On June 15, 2015, representatives of a financial advisor to Party A, a China-based financial sponsor, contacted Abid Ahmad, a senior advisor to Lattice in connection with strategic transactions, and informed him that Party A was interested in meeting with Lattice to discuss a potential strategic transaction involving Lattice and Party A. The representatives of Party A’s financial advisor indicated that they believed Party A was a highly motivated buyer and would be prepared to offer a price that represented a very meaningful premium to Lattice’s then-current valuation. Mr. Ahmad promptly notified Darin G. Billerbeck, Lattice’s Chief Executive Officer.

On June 17, 2015, Mr. Billerbeck advised John Bourgoin, Lattice’s Chairman of the Board of Directors, of Party A’s interest, and Mr. Bourgoin agreed that Mr. Billerbeck should have an introductory meeting with Party A. Later that day, Lattice sent a proposed form of nondisclosure agreement to Party A, and Mr. Ahmad subsequently scheduled a meeting with the representatives of Party A for July 15, 2015.

On June 22, 2015, Robin Abrams, a member of Lattice’s Board, was contacted by a business acquaintance, who introduced her to a representative of Party B, another China-based financial sponsor.

On July 6, 2015, Ms. Abrams met with a representative of Party B. During the meeting, the representative of Party B indicated that Party B was very interested in pursuing a strategic transaction with Lattice, and asked to be introduced to Mr. Bourgoin. Ms. Abrams contacted Mr. Bourgoin and they scheduled a meeting with representatives of Party B for August 11, 2015.

On July 14, 2015, Lattice and Party A entered into a nondisclosure agreement. Among other things, the nondisclosure agreement imposed a nine-month standstill on Party A’s ability to acquire any Lattice common stock. However, the standstill automatically terminated upon (1) the acquisition by any person or group of, or Lattice’s entry into an agreement for any person or group to acquire, 50% or more of Lattice’s common shares, or (2) the commencement by a third party of a tender or exchange offer for 50% or more of Lattice’s common shares that the Lattice Board does not recommend that Lattice stockholders reject. We refer to this form of nondisclosure agreement as “Lattice’s Standard Form NDA.”

On July 15 and 16, 2015, Mr. Billerbeck and Mr. Ahmad had meetings with representatives of Party A and Party A’s financial advisor in Beijing, China to discuss Lattice’s business and a possible strategic transaction involving Lattice and Party A. The representatives of Party A provided Mr. Billerbeck and Mr. Ahmad with additional information regarding Party A and why they believed that a transaction with Lattice would be a good strategic fit for Party A, and indicated that Party A was highly motivated and had been willing to pay a relatively high premium in another recent transaction. Mr. Billerbeck provided the representatives of Party A with an overview of Lattice’s current business and future plans. Mr. Billerbeck later reported to Mr. Bourgoin on the discussions with Party A.

On each of July 21 and July 28, 2015, a representative of Party A’s financial advisor contacted Mr. Ahmad to reiterate Party A’s interest in continuing to discuss a potential strategic transaction with Lattice, but noted that given the recent declines in Lattice’s stock price (the closing trading price for Lattice common shares was $4.92 on July 27, 2015, while it was $6.39 on June 12, 2015, the last trading day prior to the date Party A’s financial advisor first contacted Lattice), the timing might not be appropriate to make an offer.

On August 6, 2015, the Board held a meeting and discussed Lattice’s financial performance and prospects, including recent revenue shortfalls as compared to internal forecasts, and potential cost saving measures. Mr. Billerbeck reported on the discussions with Party A and the Board discussed Party A and the potential benefits of exploring a strategic transaction with Party A. The Board instructed Mr. Billerbeck to set up a meeting with representatives of Party A to discuss further Party A’s interest in a potential strategic transaction with Lattice, which was later set for September 1, 2015.

On August 11, 2015, Ms. Abrams and Mr. Bourgoin met with the representative of Party B, and discussed Party B’s interest in pursuing a potential strategic transaction with Lattice.

On August 23, 2015, representatives of Party B contacted Mr. Bourgoin to request a follow-up meeting, and the next day, Mr. Bourgoin discussed the meeting with Party B with the other members of the Board, and the Board determined that Lattice management should be instructed to meet with Party B and explore its interest in pursuing a potential strategic transaction with Lattice.

On August 31, 2015, the Board held a meeting, with members of Lattice’s senior management in attendance. Mr. Bourgoin reported on the discussions with Party B, and the Board instructed Mr. Billerbeck to set up a meeting with representatives of Party B to discuss further Party B’s interest in a potential strategic transaction with Lattice.

During September and October 2015, representatives of Lattice senior management met separately on several occasions with representatives of Party A and Party B, including in-person meetings in Beijing, China, regarding a potential strategic transaction involving Lattice.

In furtherance of discussions with Party B, on October 23, 2015, Lattice and Party B entered into Lattice’s Standard Form NDA.

On November 4, 2015, Mr. Ahmad met with representatives of Party A and discussed Lattice’s business, growth strategies and forecasts for 2015 and 2016. Party A’s representatives indicated that Party A was now preparing to submit a non-binding indication of interest proposing a strategic transaction involving Lattice and Party A, and that Party A was seeking investors who would be willing to provide the necessary financing.

On November 5, 2015, the Board held a meeting. At this meeting, Mr. Billerbeck led a discussion of Lattice’s financial performance and prospects, including expectations for the fourth quarter of 2015 and projections for 2016 and subsequent years, product road map and key customer opportunities, potential cost cutting measures, and Lattice’s strategic position and strategic options, including the possibility of a strategic transaction. Also at this meeting, a prospective financial advisor made a presentation to the Board regarding the strategic landscape of the semiconductor industry and potential interest from buyers in China in acquiring semiconductor companies, and Mr. Billerbeck updated the Board on the discussions with Party A and Party B. Mr. Billerbeck discussed the possibility that a transaction with a China-based buyer may require approval from CFIUS and indicated that Lattice would seek a meaningful reverse termination fee payable in the event CFIUS approval was not obtained. The Board authorized Mr. Billerbeck to continue discussions with Party A and Party B.

On November 18, 2015, Mr. Ahmad met with representatives of Party B, and discussed Lattice’s business, growth strategies and views as to Lattice’s business prospects for 2015 and 2016. Party B indicated that they were seeking to put together a financing consortium and might seek to partner with another investor to submit a proposal for a potential strategic transaction involving Lattice.

On November 27, 2015, representatives of Party A contacted Mr. Ahmad to convey that Party A was continuing to seek to put together a financing consortium and that Party A might seek to partner with one or more investors to submit a proposal for a potential strategic transaction involving Lattice.

On December 2, 2015, Mr. Ahmad met with representatives of Party B to discuss Party B’s plans to submit a proposal for a potential strategic transaction involving Lattice. Party B indicated that it planned to partner with Party A to submit a proposal for a potential strategic transaction involving Lattice. While Lattice was aware that Party A and Party B had a number of significant investors in common, Lattice had not previously discussed the possibility of a joint bid with either Party A or Party B.

On December 3, 2015, the Board held a meeting, at which Mr. Billerbeck provided the Board with an update as to the status of the discussions with Party A and Party B, including the fact that Party A and Party B were now contemplating a joint bid. The Board discussed the financial resources and reputation of Party A and Party B, and encouraged management to continue discussion to see what kind of premium Party A and Party B would be prepared to offer.

On December 4, 2015, a representative of Party B contacted Mr. Ahmad to inform him that Party A and Party B were finalizing a non-binding indication of interest proposing a strategic transaction involving Lattice, Party A and Party B.

Subsequently, on each of December 5 and December 8, 2015, representatives of Party A contacted Mr. Ahmad to confirm that Party A intended to submit a proposal jointly with Party B, and that the proposal would be coming soon.

On December 8, 2015, Lattice engaged Skadden, Arps, Slate, Meagher & Flom LLP, which we refer to in this proxy statement as “Skadden”, to serve as Lattice’s legal advisor in connection with its discussions with respect to a potential strategic transaction with Party A and Party B. Lattice later also engaged Skadden in connection with its discussions with the other parties that approached or were approached by Lattice in the period leading up to when Lattice entered into the Merger Agreement.

On December 11, 2015, Party A and Party B jointly submitted a non-binding indication of interest proposing to purchase all of Lattice’s outstanding common shares for a price between $8.00 and $8.50 per share in cash. The proposal was subject to customary due diligence review and Lattice’s agreement to negotiate with Party A and Party B on an exclusive basis until February 10, 2016 (which exclusivity period would be automatically extended by one week in the event the parties were still in active negotiations as of February 10, 2016). The Board was promptly notified of the non-binding indication of interest. Based on the closing trading price of $6.26 for Lattice common shares on the previous trading day (December 10, 2015), the proposal’s range of $8.00 to $8.50 per share implied a premium of between 28% and 36%. The proposal was set to expire at 11:59 p.m. Pacific time on December 16, 2015. Party A and Party B also provided a list of requested diligence materials.

On December 14, 2015 the Board held a meeting at which representatives of Skadden advised the Board of their fiduciary duties in connection with the offer by Party A and Party B, and the Board discussed Lattice’s financial performance, prospects, and strategy. The Board also discussed engaging a financial advisor to help the Board evaluate whether the offer by Party A and Party B merited consideration at this time.

On December 17, 2015, Mr. Ahmad communicated to representatives of Party A, Party B and Party A’s financial advisor that Lattice’s Board was still considering the proposal from Party A and Party B. The parties also discussed the proposed scope of diligence that Party A and Party B were seeking to conduct.

On December 21, 2015, the Board held a meeting, with members of Lattice senior management, representatives of Skadden, and representatives of certain potential financial advisors in attendance. At this meeting, the Board approved the creation of a Strategic Alternatives Committee, which we refer to in this proxy statement as the “SAC”, which was tasked with meeting regularly, including between regularly scheduled meetings of the Board, and evaluating strategic options for Lattice to maximize stockholder value, including evaluating the proposal from Party A and Party B and any other proposals that other parties may submit with respect to potential strategic transactions with Lattice. The SAC consisted of Robert Herb (chairman), Mark Jensen and Jeff Richardson. Also at this meeting, the Board interviewed a number of potential financial advisors and selected Morgan Stanley to serve as its financial advisor, after considering Morgan Stanley’s presentation of its qualifications, related experience, reputation and prior representations, including the existence of any potential or actual conflicts of interest. The Board directed members of Lattice senior management to continue discussions with Party A and Party B to see if they could be convinced to increase their offer.

On December 23, 2015, Lattice entered into an engagement letter with Morgan Stanley to serve as its financial advisor.

Also on December 23, 2015, members of Lattice senior management, and representatives of Morgan Stanley met with representatives of Party A, Party B and Party A’s financial advisor to discuss Lattice’s business and strategy for growth, and informed them that the Board was still considering the proposal from Party A and Party B.

On December 28, 2015, representatives of Morgan Stanley and representatives of Party A’s financial advisor discussed valuation issues and Party A’s and Party B’s offer price of $8.00 to $8.50 per share.

On December 30, 2015, the Board held a meeting, with members of Lattice senior management and representatives of Morgan Stanley in attendance. At this meeting, the Board discussed Lattice’s financial performance and prospects, including the potential upside from a recent design win with a key customer, and strategic alternatives available to Lattice to maximize stockholder value, including remaining a stand-alone company, potential third party interest in investing in or acquiring a Lattice business unit, further cost reductions, a share buyback, the status of negotiations with Party A and Party B, and how to respond to the proposal from Party A and Party B. Also, the representatives of Morgan Stanley discussed their preliminary views on valuation with the Board. The Board determined that Lattice should decline to grant Party A and Party B exclusivity, but should continue to engage with Party A and Party B and allow them to conduct due diligence to determine if a higher price was attainable. The Board also discussed with representatives of Morgan Stanley other potentially interested parties, including Party C and Party D, each of which is a U.S.-based strategic entity.

Also on December 30, 2015, representatives of Morgan Stanley and representatives of Party B discussed the non-binding indication of interest by Party A and Party B and the Board’s concerns with respect to exclusivity and valuation.

On January 4, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley in attendance. At this meeting, the SAC discussed the status of negotiations with Party A and Party B, and Party A’s and Party B’s requests for additional information regarding Lattice. In addition, the SAC met in executive session (without Mr. Billerbeck in attendance) with representatives of Skadden to further discuss the progress of negotiations with Party A and Party B.

On January 8, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley in attendance, and discussed the status of the negotiations with Party A and Party B. The SAC also met in executive session, also attended by representatives of Skadden, and discussed the negotiations with Party A and Party B.

Also on January 8, 2016, a member of Lattice senior management was introduced to a representative of the management of Party E, a China-based strategic entity. The member of Lattice senior management in turn introduced the Party E representative to Mr. Ahmad, and the parties agreed to have an initial discussion regarding a potential strategic transaction or other business relationship on January 20, 2016.

On January 11, 2016, Mr. Billerbeck, Mr. Ahmad, and representatives of Morgan Stanley met with representatives of Party A, Party B and Party A’s financial advisor. The Lattice representatives urged Party A and Party B to increase their offer based on the Board’s expectations with respect to valuation expressed in response to the prior offer from Party A and Party B, and reiterated that the Board was not willing to grant exclusivity at that time. The Lattice representatives also indicated that if an acceptable price could be negotiated, Lattice would expect a significant termination fee to be payable by Party A and Party B in the event the transaction was not completed, including if the transaction was not completed due to a failure to obtain CFIUS approval. The parties also discussed expectations with respect to timing of the transaction.

On January 12, 2016, the SAC held a meeting, also attended by Mr. Billerbeck, Mr. Ahmad and representatives of Skadden and Morgan Stanley. At this meeting, Mr. Billerbeck reported to the SAC on the results of the negotiations with Party A and Party B, including that he expected Party A and Party B would shortly be making a revised offer at a higher valuation. The SAC also discussed other parties that may be interested in pursuing a potential strategic transaction with Lattice and authorized representatives of Morgan Stanley to contact Party C and Party D to explore with each of them a potential strategic transaction with Lattice. The SAC also discussed the inquiry from Party E, and authorized management to meet with Party E and explore the nature of its interest. In addition, the SAC met in executive session to further discuss the process of negotiations with Party A and Party B, including a discussion of the timeline, risks (including with respect to deal certainty and the regulatory approval process), issues around confidentiality and the diligence process, and the identification of additional strategic and financial parties that may be interested in a strategic transaction with Lattice.

On January 13, 2016, Lattice received a revised non-binding indication of interest from Party A and Party B, which now contemplated a purchase price of $9.00 per share. In addition, the revised proposal no longer called for exclusivity. The Board was promptly notified of the revised proposal. Based on the closing trading price of $5.135 for Lattice common shares on the previous trading day (January 12, 2016), the revised proposal implied a premium of 75%.

Also on January 13, 2016, representatives of Morgan Stanley separately contacted representatives of each of Party C and Party D to inquire as to whether such parties would be interested in pursuing a potential strategic transaction involving Lattice.

On January 14, 2016, the Board held a meeting, with members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance, and discussed the status of negotiations with Party A and Party B, as well as the meeting scheduled with Party E. At this meeting, representatives of Morgan Stanley provided an update on its preliminary analysis on valuation. The Board and representatives of Morgan Stanley also discussed other parties that may be interested in pursuing a potential strategic transaction with Lattice. The Board instructed Morgan Stanley to reach out at this time to Party F, a Europe-based strategic entity, and Party G, a U.S.-based strategic entity, and to continue to engage with Party C and Party D, to determine if any of these parties would be interested in a strategic transaction involving Lattice. On the same date, Lattice provided access to the diligence materials gathered in the online data room to the representatives of Party A and Party B.

On January 15, 2016, a representative of Morgan Stanley contacted representatives of Party F to inquire as to whether Party F would be interested in pursuing a potential transaction with Lattice.

On January 16, 2016, representatives of Party A’s financial advisor contacted representatives of Morgan Stanley to discuss the revised non-binding indication of interest with Party A and Party B and a projected timeline for a transaction, and to introduce Party A’s and Party B’s legal advisors. Morgan Stanley communicated that the Board had indicated the proposed price would be acceptable, subject to agreement on the amount of the reverse termination fee that would be payable in the event the transaction were not completed due to failure to obtain CFIUS approval, and the other terms of a definitive agreement, as well as Party A and Party B’s ability to demonstrate that financing was available.

On January 18, 2016, members of Lattice senior management and representatives of Morgan Stanley met with representatives of Party A, Party B and Party A’s financial advisor in San Jose, California to discuss the diligence information requested by Party A and Party B.

On January 19, 2016, Lattice and Party C entered into Lattice’s Standard Form NDA, except that in this case the nondisclosure agreement had a 12-month standstill period.

Also on January 19, 2016, a representative of Morgan Stanley contacted a representative of Party G, to inquire as to whether Party G would be interested in pursuing a potential strategic transaction involving Lattice.

On January 20, 2016, Mr. Billerbeck and other members of Lattice senior management met with representatives of Party E and discussed Lattice’s business and whether Party E was interested in pursuing a potential strategic transaction with Lattice. Party E indicated that while it may have some interest in a joint venture or other commercial relationship, it was not sure whether a strategic transaction involving Lattice and Party E would be of interest to Party E at this time, but that it would consider that possibility.

Later that day, Mr. Billerbeck and other members of Lattice senior management and representatives of Morgan Stanley met with representatives of Party A, Party B and Party A’s financial advisor for further due diligence. At this meeting, representatives of Party A and Party B indicated that they were no longer prepared to offer $9.00 per share in connection with the proposed transaction, and that the price they would be prepared to offer was much closer to $8.00. The representatives of Party A and Party B also stated that they would need more time to secure the necessary financing for the proposed transaction and that they were not willing to pay a significant reverse termination fee in connection with a failure to obtain approval from CFIUS with respect to any potential transaction.

On January 21, 2016, a representative of Party A’s financial advisor contacted representatives of Morgan Stanley to convey that Party A and Party B did not expect to be able to meet Lattice’s price expectations, and accordingly Party A and Party B would suspend their discussions regarding a potential transaction with Lattice.

Also on January 21, 2016, representatives of Party G informed representatives of Morgan Stanley that Party G was not interested in pursuing a transaction involving Lattice due to alternate corporate priorities.

On January 22, 2016, Mr. Billerbeck and representatives of Morgan Stanley discussed with representatives of Party C and its financial advisor Lattice’s business and a potential strategic transaction involving Lattice and Party C.

Also on January 22, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance, and discussed the status of negotiations with Party A and Party B, as well as the recent meeting with Party E and the fact that Party E was unlikely to make a proposal with respect to a strategic transaction with Lattice at this time. The SAC was informed that Party G had declined to pursue a transaction with Lattice and that Party F had yet to definitively respond to Lattice’s outreach. The SAC was also informed of Party A’s and Party B’s view that their price would be closer to $8.00 per share and their rejection of a significant reverse termination fee payable in connection with a failure to obtain CFIUS approval. The SAC discussed the fact that Party A and Party B had also not been able to demonstrate that financing was available. Mr. Billerbeck and representatives of Morgan Stanley advised the SAC on discussions with other potential bidders, following which the SAC directed that Morgan Stanley cease any additional outreach to potential acquirers. Lattice subsequently terminated access by representatives of Party A and Party B to the online data room. In addition, the SAC met in executive session with representatives of Skadden in order to further discuss the exploration of other strategic alternatives, including potential divestitures or further cost reductions.

On January 23, 2016, Mr. Billerbeck informed the full Board that negotiations with Party A and Party B had been terminated by Party A and Party B.

On January 29, 2016, a representative of the financial advisor to Party H, a China-based strategic entity, contacted Mr. Ahmad and informed him that Party H was interested in discussing a potential strategic transaction involving Lattice.

On February 2, 2016, a representative of Party C informed a representative of Morgan Stanley that Party C was not interested in pursuing a transaction with Lattice.

On February 5, 2016, Party H submitted a non-binding indication of interest to purchase all of the outstanding stock of Lattice for $9.00 per share in cash, contingent upon Party H’s ability to find financing sources to help finance the proposed transaction and satisfactory completion of customary due diligence. The Board was promptly notified of the non-binding indication of interest. Based on the closing trading price of $4.72 for Lattice common shares on the previous trading day (February 4, 2016), the proposal implied a premium of 91%.

On February 6, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Morgan Stanley in attendance, and discussed Party H’s non-binding indication of interest, including a discussion of timeline, required regulatory approvals (including the fact that CFIUS approval would be required in connection with a transaction with Party H), deal certainty and whether Party H would be able to raise enough additional equity and debt financing to pursue a transaction with a company of Lattice’s size. After discussing Lattice’s stand-alone plan and strategic alternatives, the Board instructed Mr. Billerbeck and representatives of Morgan Stanley to pursue further discussions with each of Party D and Party H regarding a potential strategic transaction.

Also on February 6, 2016, Lattice and Party H entered into Lattice’s Standard Form NDA, except that in this case the nondisclosure agreement had a 12-month standstill period.

On February 9, 2016, Lattice and Party D agreed upon the terms of a nondisclosure agreement, but Party D did not return a signed nondisclosure agreement at that time.

On February 10, 2016, Mr. Billerbeck, Mr. Ahmad and representatives of Morgan Stanley met with representatives of Party H for due diligence on Lattice’s business, and discussed expectations regarding timing and Party H’s ability to obtain the equity and debt financing that would be required.

On February 11, 2016, the Board held a meeting, with members of Lattice senior management and representatives of Skadden also in attendance, and discussed the status of negotiations with Party H and Party H’s ability to obtain financing, as well as Lattice’s stand-alone prospects and its forecast for fiscal year 2017, potential divestitures or further cost reductions, and the status of Lattice’s discussions with parties that might be interested in a strategic transaction.

On February 12, 2016, representatives of Party H’s financial advisor and representatives of Morgan Stanley discussed the status of Party H’s efforts to obtain financing. Later that day, Party H submitted a revised non-binding indication of interest to purchase all of the outstanding stock of Lattice for $9.00 per share in cash. The revised proposal now contemplated a three week deadline for demonstrating progress towards obtaining committed financing and the completion of diligence. The Board was promptly notified of the revised non-binding indication of interest. Based on the closing trading price of $4.32 for Lattice common shares on the previous trading day (February 11, 2016), the proposal implied a premium of 108%. Later that day, Lattice provided access to the diligence materials gathered in the online data room to the representatives of Party H, and continued to provide additional diligence materials through the online data room to Party H and a number of proposed lenders to Party H over the following weeks.

After being contacted by a representative of Party A, on February 18, 2016, Mr. Bourgoin met with representatives of Party A, who informed him that Party A remained interested in the possibility of a transaction. However, Party A did not make any specific proposal at that time.

On February 25, 2016, representatives of Morgan Stanley discussed with representatives of Party H’s financial advisor the status of Party H’s proposal and efforts to obtain committed financing since the February 10, 2016 management meeting.

On February 26, 2016, during an unrelated meeting with a representative of Party I, a U.S.-based strategic entity, a representative of Morgan Stanley discussed Party I’s strategic plans, including companies that Party I was considering for strategic transactions. During this conversation, Party I indicated that it believed there would be limited synergy potential in a transaction with Lattice and that a potential transaction with Lattice was not likely to be a good strategic fit for Party I.

On February 29, 2016, a representative of Party D informed representatives of Morgan Stanley that Party D did not intend to proceed with discussions with Lattice.

On March 3, 2016, representatives of Morgan Stanley had a discussion with representatives of Party H’s financial advisor, in which the financial advisor informed Morgan Stanley it was no longer serving as financial advisor to Party H. Subsequently, a member of Party H’s management confirmed that it was no longer working with its previous financial advisor and that it was in the process of retaining a new financial advisor.

On March 11, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley in attendance, and discussed the status of negotiations with Party H, the communication from Party H’s former financial advisor, and the SAC’s concerns about Party H’s ability to obtain financing for a potential strategic transaction with Lattice. The SAC then discussed outreach with other potential bidders and the lack of interest from the other parties contacted.

On March 16, 2016, representatives of Morgan Stanley and representatives of Party H discussed Party H’s efforts to secure financing and how much additional time Party H would need to secure financing commitments for a transaction.

After being contacted again by a representative of Party A, on March 23, 2016, Mr. Bourgoin met a second time with a representative of Party A, who again indicated that Party A remained potentially interested in the possibility of a transaction with Lattice. Mr. Bourgoin encouraged them to submit an updated proposal if they remained interested, however Party A did not subsequently submit a further proposal.

On each of March 28 and 29, 2016, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley met with representatives of Party H for due diligence sessions to discuss Lattice’s business and technology, and to discuss Party H’s efforts to secure financing for the transaction and set deadlines for Party H to obtain financing.

On April 4, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance, and discussed the status of negotiations with Party H, including Party H’s prospects of obtaining the necessary financing, and the non-binding indications of interest from certain China-based lenders provided by Party H, and representatives of Morgan Stanley summarized the results of its outreach with other potential bidders.

On April 5, 2016, representatives of Skadden and Morgan Stanley discussed with representatives of Party H and its legal advisor potential issues with respect to a transaction with Party H, including Party H’s ability to obtain financing commitments for the funds necessary to complete a transaction, the size and triggers of termination and reverse termination fees, as well as potential alternatives to a reverse termination fee in the event of failure to obtain CFIUS approval, and a letter of credit to be established to secure Party H’s obligations.

On April 8, 2016, a representative of Lazard Frères & Co. LLC, which we refer to in this proxy statement as “Lazard”, financial advisor to China Reform Fund Management Co., Ltd., a China-based financial sponsor and affiliate of CVC, which we refer to in this proxy statement as Party J, contacted a representative of Morgan Stanley to inform them that Party J would be interested in discussing a potential strategic transaction involving Lattice.

On April 9, 2016, representatives of Skadden delivered a proposed merger agreement for the transaction with Party H to representatives of Party H’s legal advisor. Throughout April, Lattice’s and Party H’s senior management and legal advisors negotiated the terms of a proposed merger agreement.

On April 11, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance, and discussed the status of the ongoing negotiations with Party H, the status of the outreach to Party F, and the inquiry from Party J. The SAC instructed Lattice management to engage in discussions with Party J and instructed Morgan Stanley to continue its outreach to Party F.

On April 13, 2016, Tsinghua Unigroup International Co., Ltd., which we refer to in this proxy statement as “Tsinghua”, filed a Schedule 13-D disclosing that it had acquired ownership of approximately 6% of Lattice’s outstanding common stock. Lattice’s stock price increased by 18% in response to this announcement.

On April 14, 2016, representatives of Morgan Stanley discussed with representatives of Party H and a new financial advisor to Party H the status of the potential transaction, Party H’s efforts to date to secure committed financing, and Party H’s financial due diligence.

On April 15, 2016, a representative of Morgan Stanley again contacted representatives of Party F to discuss a potential transaction with Lattice.

On April 18, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance, and discussed the status of the negotiations with Party H, as well as the Schedule 13-D filed by Tsinghua. Representatives of Morgan Stanley also discussed with the SAC other potential strategic buyers.

On April 25 and 26, 2016, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley met with representatives of Party H to discuss issues relating to the merger agreement and Party H’s efforts to secure financing.

On April 26, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance, and discussed the status of key open items in the negotiations, including a discussion of reverse termination fees and regulatory approvals, the need to obtain a letter of credit, establish an escrow or otherwise secure Party H’s obligations, and the status of Party H’s diligence. The SAC discussed with Lattice management and Morgan Stanley the need for Party H to demonstrate that it can obtain the required financing for a transaction if Lattice was going to continue to engage in negotiations with Party H. Also at this meeting, representatives of Morgan Stanley provided the SAC with a summary of discussions with previously engaged potential strategic parties.

On April 27, 2016, Lattice and Party J entered into Lattice’s Standard Form NDA, except that in this case the nondisclosure agreement had a 12-month standstill period.

On April 28, 2016, the new financial advisor to Party H sent representatives of Morgan Stanley a presentation regarding potential financing sources for the transaction with Party H.

On May 2, 2016, representatives of Morgan Stanley and another new financial advisor to Party H discussed the status of ongoing negotiations. Also on May 2, 2016, based on a lack of progress on obtaining financing commitments, and in the negotiations over other key terms, including security for Party H’s obligations, representatives of Lattice informed representatives of Party H that Lattice would discontinue negotiations and the provision of additional due diligence materials to Party H, but that Morgan Stanley would continue to be available to discuss Party H’s efforts to obtain financing.

On May 3, 2016, a representative of Morgan Stanley met with a representative of Party E on an unrelated matter, and in the course of a discussion of Party E’s strategy, the representative of Party E indicated that it would now be interested in discussing a potential strategic transaction with Lattice, but that it had concerns about the need for potential CFIUS approval for such a transaction. A representative of Party E subsequently reached out to a representative of Morgan Stanley and a meeting between representatives of Lattice senior management and representatives of Party E management was set for May 18, 2016.

On May 5, 2016, Mr. Billerbeck, Mr. Ahmad, and representatives of Morgan Stanley discussed with Benjamin Chow, a representative of Party J, Lattice’s business and the possibility of a strategic transaction involving Lattice. Mr. Chow noted that, given that Party J was a private equity fund, rather than a strategic buyer, he would be seeking assurances that senior management planned to remain employed with Lattice post-transaction. Mr. Billerbeck stated that he understood Party J’s position and would discuss it with the Board and was willing to have such a discussion, but not until he and the other members of Lattice senior management were authorized to do so by the Board at the appropriate time.

On May 10, 2016, representatives of Morgan Stanley had a discussion with representatives of another new financial advisor to Party H, during which the representatives of Morgan Stanley reiterated the need for Party H to secure financing before Lattice would provide additional diligence information to Party H.

On May 12, 2016, the Board held a meeting, and Mr. Billerbeck discussed Lattice’s financial performance, strategic initiatives, and key risks and opportunities as a stand-alone company, including Lattice’s prospects for future design wins to offset declines in certain areas of its business, as well as the upcoming meetings in China with Party E, Party K and Party J.

On May 17, 2016, Lattice and Party E entered into Lattice’s Standard Form NDA, except that in this case the nondisclosure agreement had a 12-month standstill period.

On May 18, Mr. Billerbeck and another member of Lattice senior management had a meeting in Beijing, China with representatives of Party E. The representatives of Party E indicated that, while Party E was interested in pursuing a transaction with Lattice, they were not sure that Party E could offer a satisfactory price and were unwilling to entertain any form of reverse termination fee payable in the event CFIUS approval were not obtained for the transaction.

Also on May 18, 2016, Mr. Billerbeck and other members of Lattice senior management had a meeting in Beijing, China with representatives of Party K, during which the representative of Party K indicated that they were not prepared to discuss a potential transaction with Lattice.

Later on May 18, 2016, Mr. Billerbeck had a meeting in Shanghai, China with Mr. Chow to discuss Lattice’s business prospects and a potential transaction with Lattice, including any potential regulatory approvals that would be required in connection with such a transaction. Mr. Chow stated that Party J and its affiliates would not be willing to pay any reverse termination fee if any required regulatory approval for such a transaction were not obtained.

On May 20, 2016, members of Lattice senior management and representatives of Skadden had a meeting with representatives of CFIUS in Washington, D.C. to discuss the potential acquisition interest received by Lattice from parties based in China, to provide an overview of Lattice’s business, technology and operations, and to better understand potential impediments or concerns that CFIUS may raise to any potential transaction.

Also on May 20, 2016, representatives of Lazard contacted representatives of Morgan Stanley to indicate that Party J was preparing a non-binding indication of interest for a potential transaction with Lattice.

On May 23, 2016, Mr. Chow contacted Mr. Billerbeck to inform him directly that Party J was preparing a non-binding indication of interest for a potential transaction involving Lattice and Party J.

On May 26, 2016, a representative of Party F informed a representative of Morgan Stanley that Party F was not interested in pursuing a potential transaction with Lattice.

On May 27, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management, and representatives of Skadden and Morgan Stanley in attendance, and discussed the fact that representatives of Morgan Stanley had continued to work with Party H, but that Party H had not been able to demonstrate progress in obtaining financing commitments. The SAC also discussed the Schedule 13-D filed by Tsinghua, and Lattice management reported that based on their meetings in China with an affiliate of Tsinghua, they believed Tsinghua’s investment in Lattice was not based on interest in pursuing a potential strategic transaction with Lattice.

On July 7, 2016, Party J and its affiliates submitted a non-binding indication of interest, proposing to acquire all the outstanding shares of Lattice for $8.00 per share in cash, which non-binding indication of interest contemplated that Lattice and Party J would jointly approach CFIUS as part of the diligence process to better assess any potential regulatory risk. The non-binding indication of interest also stated that Party J and its affiliates had the financial resources to finance the transaction with equity without any need for third party financing. The Board was promptly notified of the non-binding indication of interest. Based on the closing trading price of $5.32 for Lattice common shares on the previous trading day (July 6, 2016), the proposal implied a premium of 50%.

On July 8, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley in attendance, and discussed the offer from Party J. Representatives of Morgan Stanley provided Morgan Stanley’s updated analysis on valuation, and the SAC discussed the absence of a termination fee payable if CFIUS approval was not obtained and the risk that CFIUS approval would not be obtained, the size of the proposed termination fee and reverse termination fee, and the fact that Party J had equity funding available to pay the entire purchase price. The SAC instructed Lattice management to permit Party J to conduct limited diligence and to negotiate with Party J to determine if Party J would offer a higher price.

On July 14, 2016, Lattice provided Party J and its affiliates and advisors with limited access to the online data room.

On each of July 19 and 20, 2016, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley met with representatives of Party J and Jones Day, legal advisor to Party J, at which meeting members of Lattice senior management provided a presentation on Lattice and the parties discussed other details of a potential strategic transaction, including the possibility of arranging a meeting among representatives of Lattice, Party J and CFIUS in order to better assess the prospects for obtaining CFIUS approval.

On July 26, 2016, Mr. Billerbeck, other members of Lattice senior management and representatives of Morgan Stanley had a meeting with Mr. Chow and representatives of Lazard. The members of Lattice senior management provided additional information on Lattice’s business and strategy. The parties also discussed Lattice’s expectations regarding valuation, with Lattice management pushing for a higher price.

On July 28, 2016, Party J and its affiliates submitted a revised non-binding indication of interest, indicating that Party J and its affiliates were interested in pursuing an all-cash transaction to acquire all the outstanding shares of Lattice for a price between $8.75 and $9.00 per share, and proposing that Lattice and Party J enter into an agreement providing for exclusivity until September 15, 2016 to incentivize Party J and its affiliates to dedicate the necessary resources to complete a transaction within a short timeframe. The Board was promptly notified of the non-binding indication of interest. Based on the closing trading price of $6.14 for Lattice common shares on the previous trading day (July 28, 2016), the proposal’s range of $8.75 to $9.00 per share implied a premium of between 43% and 47%. Over the following weeks, Lattice provided updated and further diligence material in the online data room in response to requests from Party J.

On August 1, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley in attendance, and reviewed and discussed Party J’s and its affiliates’ revised non-binding indication of interest and proposed exclusivity agreement. Following that discussion, the SAC determined to present the revised proposal to the Board at its next meeting later in the week, directed Lattice management to continue to pursue an increase in price, and authorized Lattice management to make available further due diligence materials to Party J to permit it to refine its view of price.

Also on August 1, 2016 and again on August 5, 2016, Mr. Ahmad, Mr. Chow and representatives of Lattice’s and Party J’s legal advisors discussed the CFIUS approval process, including further discussion of the possibility of jointly engaging in discussions with representatives of CFIUS with respect to a potential transaction in order to better understand CFIUS’ position with respect to a potential transaction so as to, from Lattice’s perspective, mitigate the absence of any reverse termination fee being payable if CFIUS approval was not obtained.

On August 5, 2016, the Board held a meeting. Members of Lattice senior management and representatives of Skadden and Morgan Stanley also participated in this meeting. At this meeting, the Board discussed Lattice’s stand-alone business, including Lattice’s updated internal management forecasts, and the risks associated with achieving management’s forecasts. These forecasts were the “Upside Case” that was subsequently provided to Morgan Stanley (for purposes of its valuation analysis), and a subset of which was also provided to Canyon Bridge, as described under “The Merger – Certain Prospective Financial Data.” Morgan Stanley discussed its analysis on valuation and outreach efforts to date, and Skadden discussed the negotiations to date with respect to key issues in the transaction, including the risks related to obtaining CFIUS approval. Following discussion, the Board resolved to enter into an exclusivity arrangement with Party J to pursue active negotiations.

On August 8, 2016, Lattice and Party J entered into an exclusivity agreement pursuant to which Lattice agreed not to initiate or facilitate discussions regarding a potential strategic transaction with any third party through August 21, 2016, such exclusivity date to be automatically extended to September 21, 2016 should, on or prior to 11:59 p.m. on August 21, 2016, Party J confirm its continued willingness to negotiate a transaction with Lattice that involved a per share price of at least $8.75 to $9.00 per share of Lattice’s common stock.

Also on August 8, 2016, Mr. Ahmad, other members of Lattice senior management and representatives of Morgan Stanley met with Mr. Chow and representatives of Lazard to provide Party J with additional diligence information regarding Lattice’s business.

On each of August 10, 2016 and August 11, 2016, members of Lattice senior management provided Mr. Chow and representatives of Lazard with additional information on Lattice’s financials and products.

On August 12, 2016, the members of the Board other than Mr. Billerbeck, whom we refer to collectively in this proxy statement as the “Non-Management Lattice Directors”, held a meeting. Representatives of Skadden and Morgan Stanley also participated in this meeting. At this meeting, representatives of Morgan Stanley discussed their current view on valuation, and the Board discussed the proposed terms of the exclusivity agreement, the status of negotiations with respect to key issues related to a transaction with Party J and its affiliates (including the appropriate size of the termination fee and reverse termination fee and the establishment of an escrow at signing in support of the reverse termination fee), and the proposed timeline for further negotiations, as well as the status of discussions with respect to a potential transaction involving one of Lattice’s business units. The Non-Management Lattice Directors noted that Party J was required to confirm its preliminary valuation range for Lattice in order to maintain exclusivity by August 21, 2016.

Also on August 12, 2016, Mr. Billerbeck, Mr. Ahmad, Mr. Chow and representatives of Morgan Stanley and Lazard discussed Lattice’s business and managements forecasts for 2017 and 2018, including the assumptions and risks in connection with the updated Lattice management forecasts for 2017 and 2018, which had been furnished to Party J the day prior to the meeting. For further information regarding these management forecasts, please see the discussion of the “Upside Case” under “The Merger – Certain Prospective Financial Data.”

On August 17, 2016, Lattice notified Party J that it received an inbound, unsolicited expression of interest to engage in an acquisition transaction from a representative of Party E, but that it had declined to meet with Party E pursuant to Lattice’s obligations under the exclusivity agreement with Party J.

Also on August 17, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley in attendance, and discussed the status of the diligence process and negotiations with Party J. The SAC was also informed of Party E’s recent expression of interest in engaging in a potential transaction with Lattice.

On August 21, 2016, Party J submitted to Lattice a revised non-binding indication of interest which provided for a purchase price of $8.30 in cash per share of Lattice common stock and was contingent on an extension to the exclusivity period to September 12, 2016 (which exclusivity period would be automatically extended to September 30, 2016 should Lattice determine that Party J was negotiating in good faith and making satisfactory progress towards a mutually agreed upon transaction). The Board was promptly notified of the non-binding indication of interest. Based on the closing trading price of $6.10 for Lattice common shares on the previous trading day (August 19, 2016), the revised proposal implied a premium of 36%.

On August 22, 2016, representatives of Lattice, Party J and Morgan Stanley discussed Party J’s revised proposal. During such discussion, Mr. Chow stated that, after discussions with Party J, he was considering leaving Party J to form a new private equity fund, which CVC had agreed to invest in (which fund eventually became Canyon Bridge).

Also on August 22, 2016, the SAC held a meeting to review Party J’s revised proposal, with Mr. Bourgoin, Mr. Billerbeck and representatives of Skadden and Morgan Stanley also in attendance. Representatives of Morgan Stanley discussed certain financial analyses, and the SAC discussed Party J’s questions with respect to the updated management projections for 2017 and 2018 and the prospects of Lattice in case Lattice did or did not obtain a certain design win from a key customer. Based upon uncertainty regarding the proposed new fund and its ability to finance a transaction, and concern that the new lower price could be matched by other bidders, the SAC determined not to extend exclusivity. As Party J’s exclusivity had lapsed when it failed to reaffirm its prior valuation by August 21, 2016, the SAC discussed potential outreach to other bidders.

On August 23, 2016, representatives of Party E and a financial advisor informed Mr. Billerbeck that Party E wanted to continue discussions with Lattice regarding a potential transaction. Mr. Billerbeck encouraged Party E to reach out to Morgan Stanley, and inquired whether Party E was serious in its interest and had formally engaged financial and legal advisors.

On August 24, 2016, the SAC held a meeting, with Mr. Billerbeck and representatives of Skadden and Morgan Stanley in attendance. At this meeting, representatives of Morgan Stanley informed the SAC of the status of negotiations with Party J and Mr. Chow. At this meeting, representatives of Morgan Stanley provided an updated valuation analysis. Mr. Billerbeck also updated the SAC on his discussions with representatives of Party E. The SAC instructed Lattice management and Morgan Stanley to request further information regarding the plans for a new private equity fund and to inquire as to when financing commitments would be secured, and also instructed Morgan Stanley to engage with Party E and to prepare a list of other potential suitors for outreach.

On August 26, 2016, the Board held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley in attendance. At this meeting, representatives of Morgan Stanley advised the Board of developments related to the discussions with Party J, Party E and other potential strategic partners. Following the meeting, the Non-Management

Lattice Directors met in executive session, also attended by representatives of Skadden, during which representatives of Skadden provided an overview of the Board members’ fiduciary duties in considering Party J’s proposal and the Non-Management Lattice Directors authorized outreach to various potential strategic acquirers, including Party C, Party D, Party E and Party L, a U.S.-based strategic entity. The Non-Management Lattice Directors also tasked Mr. Jensen, as chairman of the Audit Committee of the Board, to have the Audit Committee work with management to review the updated management forecasts.

Also on August 26, 2016, representatives of Morgan Stanley had a discussion with representatives of Party E’s financial advisor regarding Party E’s interest in pursuing a potential strategic transaction with Lattice, including a list of diligence information requested by Party E, and requested confirmation that Party E had formally engaged a financial advisor and legal advisor.

On August 29, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley in attendance. At this meeting, representatives of Morgan Stanley reported that Party E had confirmed that it had engaged a financial advisor for a potential strategic transaction with Lattice. The SAC proceeded to discuss an appropriate outreach strategy with regards to Party C, Party D, Party E and Party L with Morgan Stanley.

On August 30, 2016, representatives of Morgan Stanley contacted representatives of Party C to discuss a potential strategic transaction with Lattice.

Also on August 30, 2016, representatives of Morgan Stanley contacted representatives of Party E to discuss the list of requested diligence information and the need to enter into a new nondisclosure agreement that would also be binding on Party E’s affiliates.

On August 31, 2016, members of Lattice senior management met with Party L to engage in a general discussion with representatives of Party L regarding Lattice’s business and Party L’s potential interest in a strategic transaction involving Lattice.

Also on August 31, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, representatives of Morgan Stanley provided an update on discussions with Party J and reported on outreach efforts to Party C, Party D, Party E, Party L, and the SAC authorized Morgan Stanley to reach out to Party M, Party N, Party O and Party P, each of which is a U.S.-based strategic entity. The SAC again determined that Mr. Chow must provide additional details and documentation relating to the structure and financing of the new private equity fund as a precursor to consideration of a transaction with such private equity fund. Mr. Ahmad provided an update on his discussions with third parties with respect to a potential divestiture of a Lattice business unit.

Subsequently on August 31, 2016, representatives of Morgan Stanley separately contacted representatives of Party M, Party N, Party O and Party P to discuss each party’s level of interest regarding a potential strategic transaction with Lattice.

On September 1, 2016, a representative of Morgan Stanley again contacted a representative of Party C to discuss a potential strategic transaction with Lattice.

Also on September 1, 2016, Lattice and Party P entered into Lattice’s Standard Form NDA, except that in this case the nondisclosure agreement had a six-month standstill period.

On September 2, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management, and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, representatives of Morgan Stanley confirmed that Mr. Chow had formed CBC Partners and was now in the process of forming a new private equity fund (the fund which would become Canyon Bridge) in which CVC would be an investor, and that the newly formed private equity fund would seek to effect a transaction with Lattice. The representatives of Morgan Stanley also confirmed that they had informed representatives of Lazard that Lattice would not consider exclusivity with Canyon Bridge until additional clarity had been provided with regards to Canyon Bridge’s structure and financing. The SAC also discussed updates on discussions with Party L, and updates on outreach efforts with Party C, Party D Party M, Party N, Party O and Party P. Members of Lattice senior management also provided an update on discussions with respect to a possible divestiture of a Lattice business unit.

Later on September 2, 2016, representatives of Party D informed representatives of Morgan Stanley that it was unlikely to move forward with an offer.

Also on September 2, 2016, representatives of Party N informed representatives of Morgan Stanley that they were not interested in pursuing a transaction with Lattice.

On September 3, 2016, representatives of Party M contacted representatives of Morgan Stanley to inform them that Party M was not interested in pursuing a transaction with Lattice because such a transaction did not fit Party M’s long term operating model.

On September 6, 2016, Mr. Billerbeck and Mr. Ahmad met with representatives of Party L and its financial advisor during which discussions both parties exchanged information regarding their strategy and business and discussed potential synergies in a transaction with Lattice.

Also on September 6, 2016, Lattice and Party L entered into Lattice’s Standard Form NDA, except that in this case the nondisclosure agreement had a six-month standstill period.

Additionally on September 6, 2016, a representative of Party E’s financial advisor communicated with a representative of Morgan Stanley and sent comments on the proposed form of nondisclosure agreement. The representative of Morgan Stanley indicated that the proposed comments were acceptable, but asked for confirmation that based on the proposed Party E signatory, the nondisclosure agreement would cover Party E’s affiliates.

On September 6, 2016, and again on September 7, 2016, Mr. Ahmad and representatives of Morgan Stanley met with Mr. Chow and discussed the proposed structure of Canyon Bridge and its funding commitments from investors, including CVC.

On September 7, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, representatives of Morgan Stanley provided an update on discussions with Canyon Bridge, as well as summarizing outreach efforts with Party C, Party D, Party E, Party M, Party N, Party O and Party P, including that Party D, Party M and Party N indicated that they had no interest in pursuing a potential strategic transaction with Lattice. Morgan Stanley reported that Canyon Bridge had committed to providing further information regarding the structure of Canyon Bridge and financing commitments by the end of the week. Mr. Billerbeck also summarized the September 6, 2016 meeting with Party L. Mr. Ahmad reported on the status of his discussions regarding a possible divestiture of a Lattice business unit.

Also on September 7, 2016, Mr. Ahmad and representatives of Morgan Stanley engaged in a general discussion with representatives of Party O, provided an overview of Lattice’s business based on publicly available information, and discussed the possibility of a potential strategic transaction involving Lattice and Party O.

Additionally on September 7, 2016, a representative of Morgan Stanley communicated with a representative of Party E’s financial advisor and reiterated the need for Party E to confirm that it had formally engaged a financial advisor and legal advisor.

On September 8, 2016, Mr. Billerbeck and Mr. Ahmad met with representatives of Party P and discussed Lattice’s business and the possibility of a potential strategic transaction involving Lattice and Party P.

Also on September 8, 2016, the Audit Committee of the Board held a meeting, with Mr. Billerbeck and other members of Lattice senior management in attendance, and reviewed and asked questions regarding management’s forecasts for 2017 and 2018, including regarding the forecasting process, the revenue forecasts for key new products, and the assumptions, risks and opportunities reflected in such forecasts. Based on feedback from the Audit Committee, Lattice management developed a downside scenario showing the impact if Lattice failed to achieve an anticipated design win with a key customer, which we refer to in this proxy statement as the “Downside Case.” These management forecasts, including both the Upside Case and the Downside Case, were subsequently provided to Morgan Stanley for purposes of its valuation analysis, and subsets of which were also provided to Canyon Bridge. For further information regarding these management forecasts, please see “The Merger – Certain Prospective Financial Data.”

On September 9, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, representatives of Morgan Stanley provided an update on the discussions of a potential CFIUS filing with Canyon Bridge, as well as remaining outreach efforts with other parties, including that Party P had still not made an offer, and that Party L had indicated that the timing was not good given recent pressure on their stock price and the likelihood that any offer would need to include a stock component. The SAC also discussed the updated projections prepared by management, and discussed analyses with respect to valuation, the prospect for a design win with a key customer, and the operational risks inherent in the projections. Later on September 9, 2016, Lattice and Canyon Bridge entered into a nondisclosure agreement on the same terms as were agreed with Party J.

On September 10, 2016, Canyon Bridge submitted a non-binding indication of interest to acquire all of the equity interests of Lattice for $8.30 per share in an all-cash transaction, contingent upon receipt of final approval from Canyon Bridge’s investment committee and Lattice’s entry into an exclusivity agreement with Canyon Bridge by September 13, 2016, and which contemplated Canyon Bridge and Lattice jointly determining whether CFIUS clearance would be required for the transaction and, if so, that the parties would jointly approach CFIUS as part of the diligence process. The Board was promptly notified of the non-binding indication of interest. Based on the closing trading price of $5.98 for Lattice common shares on the previous trading day (September 9, 2016), the proposal implied a premium of 39%.

On September 11, 2016, a representative of Party P informed representatives of Morgan Stanley that Party P was no longer interested in pursuing a potential transaction with Lattice because such a transaction would not fit with Party P’s long-term business plans.

Later on September 11, 2016, a representative of Party C also informed a representative of Morgan Stanley that Party C was no longer interested in further pursuing a potential transaction with Lattice.

On September 12, 2016, a representative of Party O’s financial advisor informed a representative of Morgan Stanley that Party O was not interested in pursuing a potential transaction with Lattice.

On the morning of September 12, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, representatives of Morgan Stanley confirmed that the outreach conducted had not resulted in any additional offers for a transaction with Lattice, and the SAC discussed the status of discussions regarding a potential divestiture of one of Lattice’s business units.

Also on September 12, 2016, Party L submitted a proposal to acquire Lattice at a significantly lower price than the offer from Canyon Bridge.

Later that day, the Board held a meeting, with representatives of Skadden and Morgan Stanley also in attendance. At this meeting, following discussion, the Board determined not to engage in negotiations with Party L based on the significantly lower price than the offer by Canyon Bridge. The Board also discussed that no follow up offer or response had been received from Party C. As no definitive proposal had been received from any of the parties that Morgan Stanley had engaged with, and after discussion with Morgan Stanley regarding their analysis on valuation, and after further discussion of the strategic alternatives available to Lattice, including continuing to pursue Lattice’s stand-alone plan, a potential divestiture of a Lattice business unit, and further cost reduction measures, and the risks associated with design wins with customers, the Board authorized entry into a new exclusivity agreement with Canyon Bridge, to prevent the offer from Canyon Bridge from lapsing, and instructed the SAC to supervise the negotiation of the definitive agreement with Canyon Bridge. At this meeting, Mr. Jensen also discussed the updated management projections developed by Lattice management previously discussed with the SAC, including the Upside Case and Downside Case. The Non-Management Lattice Directors then went into executive session and further discussed the strategic alternatives available to Lattice and the process for negotiations with Canyon Bridge.

On September 13, 2016, Lattice and Canyon Bridge entered into an exclusivity agreement, providing among other things that Lattice would not initiate discussions regarding a potential strategic transaction with any third party through October 4, 2016, which date would be automatically extended to October 18, 2016 absent affirmative action to the contrary. Also on September 13, 2016, Jones Day delivered to Skadden an initial draft of the merger agreement, which provided that an equity commitment letter would be executed simultaneously with the proposed merger agreement, but that no reverse termination fees would be payable to Lattice in the event of a failure to receive CFIUS approval. The initial draft merger agreement also provided that at signing an escrow account would be established and funded with an amount equal to the reverse termination fee, which escrow account would provide Lattice with certainty as to the availability of funds in the event the reverse termination fee were payable.

Between September 13, 2016 and November 2, 2016, representatives of Lattice management, Morgan Stanley, Skadden, Canyon Bridge, Lazard and Jones Day held various meetings and calls to negotiate the terms of the proposed merger agreement, and exchanged drafts of the merger agreement, and Canyon Bridge and its advisors continued to perform their due diligence on Lattice.

On September 14, 2016, Mr. Ahmad and representatives of Skadden and Jones Day discussed the CFIUS approval process in connection with a Canyon Bridge transaction.

On September 16, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance, and discussed the status of negotiations and diligence with Canyon Bridge, and the possibility of scheduling an in-person informational session with members of CFIUS in two to three weeks.

On September 19, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, the SAC discussed issues in the initial draft of the merger agreement received from Canyon Bridge (including the identity of the parties to the agreement and recourse in case of a breach of the agreement, the level of efforts required to obtain CFIUS approval, termination fees and reverse termination fees and triggers and the mechanisms for obtaining any payment from the escrow account in the event the reverse termination fee were payable) and updates on the CFIUS review process with representatives of Skadden, and received an update from Mr. Billerbeck on the status of negotiations regarding a potential divestiture of one of Lattice’s business units. In response to Canyon Bridge’s indication in the merger agreement that, given that it intended to retain Lattice senior management post-transaction, it would seek to discuss post-transaction employment arrangements with certain senior executives in connection with a transaction, the SAC further resolved that any such discussions should take place only after all of the material issues in the transaction negotiations had been resolved. Later that day, Skadden delivered to Jones Day a revised merger agreement draft.

On September 21, 2016, Party E sent a representative of Morgan Stanley an executed copy of Lattice’s Standard Form NDA, except that in this case the nondisclosure agreement had a 12-month standstill period, and requested a call to discuss Lattice’s questions regarding whether Party E had engaged a financial and legal advisor. Morgan Stanley did not respond to Party E’s financial advisors pursuant to Lattice’s obligations under the exclusivity agreement with Canyon Bridge.

On September 22, 2016, members of Lattice senior management and representatives of Skadden and Morgan Stanley participated in meetings with representatives of Canyon Bridge management, Jones Day and Lazard to negotiate the merger agreement and conduct due diligence.

Also on September 22, 2016, a representative of Party E’s financial advisor reached out to Morgan Stanley to discuss Party E’s potential interest in a transaction with Lattice, but Morgan Stanley declined to meet with Party E’s financial advisors pursuant to Lattice’s obligations under the exclusivity agreement with Canyon Bridge.

On September 23, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, the SAC discussed the results of the prior day’s negotiations with Canyon Bridge, updates on Canyon Bridge’s financing commitments and the status of negotiations regarding the potential divestiture of one of Lattice’s business units. In particular, Mr. Billerbeck reported that the parties had discussed the potential range of termination fees and reverse termination fees, and had engaged in extensive discussions regarding the level of efforts required to obtain CFIUS approval, but that these issues would not be resolved prior to the parties’ meeting with members of CFIUS to better understand whether CFIUS would have any concerns in connection with this transaction. Mr. Billerbeck also reported that Canyon Bridge had engaged an accounting firm to conduct additional financial diligence over the coming week.

On September 28, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, the SAC discussed the status of negotiations with Canyon Bridge, efforts to set up a meeting with representatives of CFIUS for the following week, and the status of Canyon Bridge’s financing commitments, and recommended that the Board allow the exclusivity period under the exclusivity agreement with Canyon Bridge to automatically extend until October 18, 2016.

On September 29, 2016, the Board held a meeting, with members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance, and discussed the status of negotiations with Canyon Bridge, including progress in obtaining financing commitments, and resolved to allow the exclusivity period under the exclusivity agreement with Canyon Bridge to automatically extend until October 18, 2016.

On October 3, 2016, the SAC held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, the SAC discussed the latest draft merger agreement received on September 29, 2016 and updates on Canyon Bridge’s financing commitments, which were anticipated to be received on or about October 9, 2016. Mr. Billerbeck also reported that a meeting had been scheduled with representatives of CFIUS on October 6, 2016, and Mr. Ahmad reported on the status of discussions regarding a potential divestiture of one of Lattice’s business units, noting that based on discussions with potential interested parties, the proceeds of such a divestiture were not expected to be a significant.

On October 6, 2016, Mr. Billerbeck, Mr. Ahmad and representatives of Skadden, Canyon Bridge and Jones Day participated in a meeting in Washington, D.C. with representatives of CFIUS to preview with CFIUS the potential transaction, including the parties involved.

On October 10, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, the SAC discussed unresolved issues reflected in the updated merger agreement delivered by Lattice to Canyon Bridge on October 7, 2016, including the size and triggers for termination fees, available remedies (including the mechanisms related to when any escrowed funds could be released to Lattice in the event the reverse termination fee were payable), and required efforts by the parties to obtain CFIUS approval, as well as the risks associated with obtaining CFIUS approval generally, and the results of the meeting with representatives of CFIUS on October 6, 2016. Following discussion in executive session, in which only Non-Management Lattice Directors and representatives of Skadden were present, the SAC provided guidance on its positions on the unresolved items in the merger agreement, and also discussed the status of discussions regarding the possible divestiture of one of Lattice’s business units.

On October 12, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, in addition to discussing an overview of recent negotiations with Canyon Bridge, representatives of Skadden provided an overview of the CFIUS review process and outlined potential mitigation measures that may be sought by CFIUS in connection with a transaction. The SAC also discussed the appropriate size for the reverse termination fee.

On October 14, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, the SAC was provided with updates on the status of negotiations with Canyon Bridge and the potential divestiture of one of Lattice’s business units. The SAC also discussed the most recent draft of the merger agreement received from Canyon Bridge on October 11, 2016, including the interim operating covenants in the agreement in light of Lattice’s prospective expenditures and plans over the upcoming year, and the treatment of outstanding equity awards. In executive session, attended by only Non-Management Lattice Directors and representatives of Skadden, the SAC discussed alternatives in case agreement could not be reached with Canyon Bridge, including discussing Lattice’s stand-alone plan.

On October 18, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, the SAC discussed key remaining issues in the merger agreement negotiation, in light of additional drafts which had been exchanged over the course of the preceding week, including efforts required to obtain CFIUS approval, and termination fees and reverse termination fees, updates on the potential divestiture of one of Lattice’s business units. In addition, Morgan Stanley provided an update on Canyon Bridge’s financing, noting that Canyon Bridge had provided evidence that it had $1.4 billion in financing commitments from a wholly owned subsidiary of CVC. The SAC also discussed the management forecasts and approved use of the management forecasts discussed on August 31, 2016 by Morgan Stanley for its valuation analysis and providing these forecasts to Canyon Bridge. For further information regarding these management forecasts, please see “The Merger – Certain Prospective Financial Data.” At this meeting, the SAC also gave Mr. Billerbeck the authority to extend Canyon Bridge’s exclusivity period through October 26, 2016. In executive session, attended by only Non-Management Lattice Directors and representatives of Skadden, the SAC further discussed the appropriate negotiation stance regarding key remaining issues in the merger agreement, including the obligations and potential mitigation measures that Canyon Bridge should be required to accept in order to obtain CFIUS approval, and the availability of recourse above and beyond the reverse termination fee. The SAC also again discussed alternatives in the event Lattice and Canyon Bridge were unable to come to terms on a transaction, including Lattice’s stand-alone plan.

Also on October 18, 2016, Lattice and Canyon Bridge amended their exclusivity agreement to extend exclusivity through October 26, 2016.

On October 19, 2016, Lattice furnished a subset of the Downside Case projections to Canyon Bridge. For further information on these projections, please see “The Merger – Certain Prospective Financial Data.”

On October 21, 2016, Mr. Ahmad and representatives of Morgan Stanley, Lazard and Jones Day discussed Lattice’s preliminary results for the third quarter of 2016 and the Downside Case projections for calendar years 2017, 2018 and 2019. Mr. Billerbeck and Mr. Chow discussed the fact that Canyon Bridge intended to retain Lattice’s management post-closing and Mr. Billerbeck and Mr. Chow also discussed plans to implement a retention plan for employees post-transaction, although no specifics were discussed at this time.

On October 24, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, the SAC discussed the CFIUS approval process in the context of a transaction with Canyon Bridge. In executive session with representatives of Skadden, the SAC further discussed outstanding issues reflected in the latest draft merger agreement (including the availability of recourse above and beyond the reverse termination fee, each party’s obligations in connection with seeking CFIUS approval and other regulatory approvals, and the circumstances under which Lattice would be entitled to receive the reverse termination fee) and again discussed Lattice’s available strategic alternatives, including its stand-alone prospects.

On October 26, 2016, the SAC held a meeting, with Mr. Bourgoin, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. At this meeting, the SAC discussed key open business points in the merger agreement negotiation and Canyon Bridge’s financing documentation, and authorized an amendment extending Canyon Bridge’s exclusivity period through October 28, 2016. The SAC also met in executive session, attended by only Non-Management Lattice Directors.

Between October 26, 2016 and October 28, 2016, Mr. Billerbeck and other members of Lattice senior management had meetings with representatives of Canyon Bridge and Jones Day in Beijing, China, with representatives of Skadden attending the meetings by phone, to negotiate open issues with respect to the proposed merger agreement, including each party’s obligations in connection with seeking CFIUS approval and other regulatory approvals, and the circumstances under which Lattice would be entitled to receive the reverse termination fee.

Also on October 26, 2016, Lattice and Canyon Bridge amended their exclusivity agreement to extend exclusivity through October 28, 2016.

On October 27, 2016, the Board held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. During this meeting, representatives of Skadden summarized and engaged the Board in a lengthy discussion regarding the terms of the proposed merger agreement, and Morgan Stanley reviewed its analysis on valuation. Mr. Billerbeck also discussed Lattice’s stand-alone prospects with the Board, noting potential sources of execution risk. The Board also discussed amending Lattice’s bylaws to provide for Delaware as the exclusive forum for certain suits. Subsequently, the Non-Management Lattice Directors met with representatives of Skadden, and determined to extend exclusivity with Canyon Bridge until November 2, 2016 to facilitate on-going negotiations. Following this discussion, the Board authorized management to start discussing their individual employment arrangements with Canyon Bridge.

On October 28, 2016, Lattice and Canyon Bridge amended their exclusivity agreement to extend exclusivity through November 2, 2016.

On October 31, 2016, a revised draft of the merger agreement was circulated to the Board for review.

Also on October 31, 2016, a representative of Party Q, a U.S.-based strategic entity, contacted Mr. Billerbeck to inform him of Party Q’s interest in a potential strategic transaction with Lattice. Mr. Billerbeck informed Party Q that the timing would not be appropriate, pursuant to Lattice’s obligations under its exclusivity agreement with Canyon Bridge.

On November 1, 2016 and November 2, 2016, Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden met with representatives of Canyon Bridge’s management, Jones Day and Lazard and finalized the merger agreement. During this period, Mr. Billerbeck and other members of Lattice senior management also negotiated amendments to existing employment arrangements with Lattice and Canyon Bridge that contemplated the waiver by such employees of acceleration of equity awards that would otherwise have occurred in connection with the proposed transaction. These employment agreements, including the letter agreements entered into among Parent, Lattice and Mr. Billerbeck and other members of Lattice senior management in connection with the Merger, are described in more detail under “The Merger – Interests of Lattice’s Directors and Executive Officers in the Merger” and in that section “– Arrangements with Parent.” Mr. Billerbeck and Mr. Chow also further discussed plans to implement a retention plan post-transaction.

On November 2, 2016, the Board held a meeting, with Mr. Billerbeck, other members of Lattice senior management and representatives of Skadden and Morgan Stanley also in attendance. During this meeting, representatives of Skadden provided an overview of several minor changes to the terms of the proposed merger agreement since the October 31, 2016 draft and the exclusive forum bylaw amendment that was proposed to be adopted in connection therewith. The Board discussed the proposed merger agreement at length, including the factors considered by the Board as described under the caption “The Merger — Recommendation of the Board of Directors and Reasons for the Merger.” Representatives of Morgan Stanley discussed certain financial analyses with the Board, as well as the assumptions and matters considered in rendering its fairness opinion. Representatives of Morgan Stanley rendered to the Board its oral opinion (later confirmed in writing) that the $8.30 per share of Lattice common stock offered by Canyon Bridge was fair, from a financial point of view, to the holders of Lattice common stock. The Board discussed these matters with representatives of Morgan Stanley and the other participants in the meeting, including the intrinsic value and premium of Canyon Bridge’s offer and other inputs and assumptions in Morgan Stanley’s valuation analysis.

The meeting then adjourned, members of Lattice senior management and representatives of Morgan Stanley left the meeting, and a meeting of the SAC commenced, also attended by the Non-Management Lattice Directors and representatives of Skadden. Members of the SAC discussed the key terms of the merger agreement and thereupon unanimously resolved to recommend that the Board approve the merger agreement and the transactions contemplated thereby.

Following the meeting of the SAC, the full Board reconvened. Following the recommendation of the SAC, the members of the Board unanimously (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement were fair to, advisable and in the best interests of Lattice and its stockholders, (2) approved the form, terms, provisions and conditions of the merger agreement and the consummation of the merger and the other transactions contemplated by the merger agreement, (3) resolved to recommend that Lattice’s stockholders vote for the adoption of the merger agreement, and (4) approved the exclusive forum bylaw amendment.

During the early morning of November 3, 2016, the merger agreement and related documents were executed and delivered by Lattice, Canyon Bridge, Parent and Merger Sub.

Lattice and Canyon Bridge issued a joint press release announcing the execution of the Merger Agreement prior to the open of trading in Lattice’s common stock on Nasdaq on November 3, 2016.



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