9.	Acquisition of Xcerra

May 8, 2018,

we announced that we entered into an Agreement and Plan of Merger (the “Merger Agreement”), dated as of

May 7, 2018,

by and among Cohu, Xavier Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of Cohu (the “Merger Sub”) and Xcerra Corporation, a Massachusetts corporation (“Xcerra”). Under the terms of the Merger Agreement, Merger Sub will merge with and into Xcerra (the “Merger”), with Xcerra continuing as the surviving corporation of the Merger (the “Surviving Corporation”) and a wholly owned subsidiary of Cohu. At the effective time of the Merger (the “Effective Time”), (a) each share of Xcerra’s common stock, par value

$0.05

per share (“Xcerra Common Stock”) issued and outstanding immediately prior to the Effective Time (other than dissenting shares and shares held by Cohu, Merger Sub, Xcerra or any direct or indirect wholly owned subsidiary of Cohu or Xcerra) will be converted into the right to receive (i)

$9.00

in cash, without interest (the “Cash Consideration”), and (ii)

0.2109

of a validly issued, fully paid and nonassessable share of common stock of Cohu, par value

$1.00

per share (“Cohu Common Stock”) (the “Stock Consideration” and, together with the Cash Consideration, the “Merger Consideration”) and (b) each outstanding Xcerra restricted stock unit (an “Xcerra RSU”) that either (i) will vest automatically according to its terms at the Effective Time, or (ii) is held by a member of the board of directors of Xcerra, will be cancelled and converted into the right to receive the Merger Consideration. All Xcerra RSUs

not

described in the preceding sentence that are outstanding and unvested at the Effective Time will be assumed by Cohu and converted into a restricted stock unit award representing that number of shares of Cohu Common Stock equal to the product of (A) the number of shares of Xcerra Common Stock represented by such Xcerra RSU immediately prior to the Effective Time multiplied by (B) the sum of (

) the Stock Consideration plus (

) the quotient of (

) the Cash Consideration divided by (y) the volume weighted average of the trading prices of Cohu Common Stock on each of the

three

consecutive trading days ending on the trading day that is

one

trading day prior to the date of the closing of the Merger.

Immediately following the closing of the Merger, Cohu’s stockholders will own approximately

71%

of the outstanding Cohu Common Stock, and Xcerra’s former stockholders will own approximately

29%

of the outstanding Cohu Common Stock, based on the number of shares of Cohu and Xcerra Common Stock outstanding as of

July 16, 2018.

Cohu Common Stock is listed on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “COHU” and Xcerra Common Stock is listed on NASDAQ under the symbol “XCRA.” Upon completion of the Merger, we expect to delist Xcerra Common Stock from NASDAQ.

The Merger will be a taxable transaction for U.S. federal income tax purposes. Cohu incurred

$4.1

million of acquisition related costs for the Xcerra transaction in the

first

six

months of

2018.

Each of Cohu and Xcerra is holding a special meeting of its stockholders (the “Cohu Special Meeting” and the “Xcerra Special Meeting,” respectively), each on

August 30, 2018,

in order to obtain the stockholder approvals necessary to consummate the Merger. At the respective special meetings, Xcerra will ask its stockholders to approve the Merger Agreement and Cohu will ask its stockholders to approve the issuance of shares of Cohu Common Stock in connection with the Merger to the extent such issuance would require approval under NASDAQ Stock Market Rule

5635

(a), which, subject to certain exceptions, generally requires stockholder approval prior to the issuance of common stock in connection with a merger to the extent such issuance would equal or exceed

20%

of the issuer’s issued and outstanding common stock before such issuance (the “Stock Issuance Proposal”). Approval of the Stock Issuance Proposal by holders of a majority of the outstanding shares of Cohu Common Stock represented in person or by proxy at the Cohu Special Meeting, and approval of the Merger Agreement by the holders of

two

-thirds of the outstanding shares of Xcerra Common Stock are conditions to the consummation of the Merger. The obligations of Cohu, Merger Sub and Xcerra to complete the Merger are also subject to the satisfaction or waiver of several other conditions to the Merger set forth in the Merger Agreement and described in our joint proxy statement/prospectus filed with the SEC on

June 21, 2018,

which was subsequently amended on

July 26, 2018,

and declared effective by the SEC on

July 30, 2018.

Our Board of Directors has unanimously approved the Merger Agreement. Our stockholders will be asked to vote on the issuance of Cohu Common Stock in the Merger at the

August 30, 2018

special stockholders meeting. The closing of the Merger is subject to the adoption of the Merger Agreement by the affirmative vote of

two

-thirds of the outstanding shares of common stock of Xcerra entitled to vote at the

August 30, 2018

special stockholders meeting. With regulatory clearance recently granted in the United States and Germany, and

such clearance required in other jurisdictions, we expect to close the merger in early

fourth

quarter

2018,

subject to shareholder approvals and other customary closing conditions.

The Merger Agreement contains certain customary termination rights, including, among others, (i) the right of either Cohu or Xcerra to terminate the Merger Agreement if Xcerra’s stockholders fail to adopt the Merger Agreement, or if Cohu’s shareholders fail to approve the issuance of Cohu Common Stock, (ii) the right of either party to terminate the Merger Agreement if the board of directors of the other party changes its recommendation, (iii) the right of Xcerra to terminate the Merger Agreement to accept a superior proposal (subject to the payment of a termination fee as described further below) (iv) the right of either Cohu or Xcerra to terminate the Merger Agreement if the Merger has

not

occurred by

November 7, 2018 (

the “Termination Date”, but which the Merger Agreement provides that this date

may

be extended by either party to

May 7, 2019

under certain circumstances) and (v) the right of either party to terminate the Merger Agreement due to a material breach by the other party of any of its representations, warranties or covenants, subject to certain conditions.

The Merger Agreement provides for Xcerra to pay to Cohu a termination fee of

$22.8

million if the Merger Agreement is terminated (i) by Cohu as a result of the Xcerra board of directors changing its recommendation that Xcerra stockholders adopt the Merger Agreement or if the Merger Agreement is terminated by Xcerra to accept a superior proposal; (ii) as a result of Xcerra stockholder approval

not

being obtained or the Merger

not

being consummated by the Termination Date, where a competing proposal was publicly disclosed and

not

publicly, irrevocably withdrawn prior to Xcerra stockholder meeting or the termination of the Merger Agreement as a result of the Merger

not

being consummated by the Termination Date, as applicable, and Xcerra subsequently consummates a competing proposal within

twelve

months of such termination or Xcerra enters into a definitive agreement for a competing proposal within such

twelve

month period and such competing proposal is subsequently consummated; or (iii) by Cohu if Xcerra is in breach of a representation, warranty or covenant that would cause the closing conditions to fail, and the breach cannot be cured within

calendar days, so long as Cohu has

not

materially breached the Merger Agreement.

The Merger Agreement provides for Cohu to pay to Xcerra a termination fee of

$22.8

million if the Merger Agreement is terminated by Xcerra (i) if Cohu is in breach of a representation, warranty or covenant that would cause the closing conditions to fail, and the breach cannot be cured within

calendar days, so long as Xcerra has

not

materially breached the Merger Agreement or (ii) if the Cohu board of directors changes its recommendation that the Cohu shareholders approve the issuance of Cohu Common Stock. The Merger Agreement further provides for Cohu to pay to Xcerra a termination fee of

$45

million if the Merger Agreement is terminated by Xcerra if, upon the satisfaction of closing conditions and the expiration of a marketing period in connection with Cohu’s debt financing, Cohu fails to consummate the Merger within

five

business days following written notice from Xcerra to Cohu in the form described in the Merger Agreement.

Cohu has obtained debt financing commitments for the transactions contemplated by the Merger Agreement. Deutsche Bank Securities Inc., a subsidiary of Deutsche Bank AG, has committed to provide debt financing for a portion of the cash consideration payable pursuant to the terms of the Merger Agreement. Cohu expects to enter into a term loan facility with Deutsche Bank Securities Inc with an aggregate principal amount of

$350.0

million, and if cash on hand at Xcerra is

not

available at the closing of the Merger, a cash bridge facility, with an aggregate principal amount of up to

$100.0

million, to finance a portion of the Merger cash consideration and pay related costs and expenses.

The foregoing description of the Merger and the Merger Agreement does

not

purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit

2.1

to Cohu’s Current Report on Form

-K filed with the SEC on

May 8, 2018.