Proposed Merger

On January 3, 2021 we entered into a definitive merger agreement with an affiliate of H.I.G. Capital (“H.I.G.”).  Under the terms of the Merger Agreement, an affiliate of H.I.G. will acquire all outstanding shares of SMTC Corporation’s common stock for $6.044 per share in cash. The SMTC Corporation Board of Directors unanimously approved the Merger Agreement.  The transaction is expected to close by the second quarter of 2021.  However, the exact timing of completion of the Merger cannot be predicted because the Merger is subject to conditions, including adoption of the Merger Agreement by the stockholders of SMTC and the receipt of regulatory approvals.

Since the announcement of the Merger, three complaints have been filed by, and purportedly on behalf of, alleged SMTC stockholders: one in the Court of Chancery in the State of Delaware, captioned Quach v. Bailey, et al., Case No. 2021-0104, filed February 5, 2021; one in the United States District Court for the District of Delaware, captioned Waterman v. SMTC Corporation, et al., Case No. 1:21-cv-00163-UNA, filed February 8, 2021; and one in the United States District Court for the Eastern District of New York, captioned Edmilao v. SMTC Corporation, et al., Case No. 1:21-cv-00751, filed February 11, 2021 (together, the “Actions”). The Actions name as defendants SMTC, our President and Chief Executive Officer and our Board. The Actions allege, among other things, that all defendants violated provisions of the Exchange Act and certain of their fiduciary duties insofar as the preliminary proxy statement filed by SMTC on January 21, 2021 allegedly omits material information with respect to the transactions contemplated therein that purportedly renders the preliminary proxy statement false and misleading. The complaints seek, among other things, injunctive relief, rescissory damages, declaratory judgment and an award of plaintiffs’ fees and expenses. The litigation is still in its preliminary stages.