Allegro terminates Sanken Japan distribution rights, pays $5M, enters transition agreements

On March 30, 2023, the Company’s wholly owned subsidiary, Allegro MicroSystems, LLC, and Sanken also entered into a Distribution Agreement (the “Short-Term Distribution Agreement”) and a Consulting Agreement (the “Consulting Agreement”), each of which were effective April 1, 2023 (the “Effective Date”). The Short-Term Distribution Agreement provides for the management and sale of Company product inventory for a period of twenty-four months from the Effective Date.

Under the terms of the Consulting Agreement, Sanken agreed to continue to provide transition services for a period of six months from the Effective Date to a strategic customer as orders for the customer are transitioned from Sanken to the Company, and the Company agreed to pay Sanken for providing these transition services.

On March 30, 2023, Allegro MicroSystems, Inc. (the “Company”) entered into a Termination of the Distribution Agreement (the “Termination Agreement”) with Sanken Electric Co., Ltd. (“Sanken”). The Termination Agreement formally terminated the Distribution Agreement dated as of July 5, 2007, by and between the Company and Sanken (the “Distribution Agreement”), effective March 31, 2023. The Distribution Agreement provided Sanken the exclusive right to distribute the Company’s products in Japan. In connection with the termination of the Distribution Agreement and as provided for in the Termination Agreement, the Company made a one-time payment of $5,000,000 to Sanken in exchange for the cancellation of Sanken’s exclusive distribution rights in Japan.