Filed By Merix
Corporation
Pursuant to Rule
425 Under the Securities Act of 1933
And Deemed Filed
Pursuant to Rule 14a-12
Under the
Securities Exchange Act of 1934
Subject Company:
Merix Corporation
Commission File
No. 1-33752
[Joint
Investor Conference Call Script]
10-07-09
Viasystems/Merix
Merger
Conference
Call - October 7, 2009
5:30
a.m., Pacific Time
Operator:
Good
morning everyone and welcome to the joint Viasystems - Merix conference
call. [Housekeeping remarks].
At this
time, I’d like to turn the call over to Tom Laughran. Please go
ahead, sir.
IR
Representative (Tom Laughran/FH):
Good
morning and thank you for joining today’s conference
call. Participating in today’s call will be the CEO of Viasystems,
David Sindelar and the CEO of Merix, Michael Burger. Also here and
available for questions are Jerry Sax, CFO of Viasystems and Kelly Lang, CFO of
Merix. During this call management will plan on first addressing the recently
announced merger of the two companies, and then Mr. Burger and Mr. Lang will
provide an overview of their first fiscal quarter’s results and recent demand
activity. The call will then be open for questions.
Before we
begin, please be advised that during this call, the companies will be making
forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995. Such statements are based on the current
assessment of their markets and other factors that will affect the combined
business. Actual results could differ materially from any implied
projections due to one or more of the factors explained in Form 10-K and other
documents that both companies file with the Securities and Exchange Commission.
Viasystems and Merix do not undertake any obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events, or other circumstances.
I’ll now
turn the call over to David . . .
David
Sindelar:
Thanks
Tom. . . and good morning everyone.
As
announced last night, we have reached a definitive agreement to merge with Merix
Corporation, combining two leading producers of high-end printed circuit boards
and related electro-mechanical solutions. As stated in our press
release, the combined companies will form the largest publicly traded PCB
manufacturer by revenue in the U.S. -- with a revenue base of approximately $840
million -- generated from a diverse, global base of customers.
This
merger creates a world-class leader in PCB and related electro-mechanical
solutions, with a complementary match up of market segments, customers and
manufacturing capabilities. It combines two global companies with
leading-edge PCB manufacturing capabilities.
Specifically,
Viasystems operates high-volume and quick-turn operations in China, which will
complement high-volume facilities that Merix operates in other locations in
Asia. We see great value in this substantial increase in capacity and larger
geographic coverage. The combined business will also benefit from Merix’
quick-turn and prototyping capabilities in the U.S.
We
believe that our two companies make a great strategic fit for many reasons. By
combining our global manufacturing and engineering capabilities we can provide
customers with a complete spectrum of services and technology in two key
geographic regions—Asia and North America.
We will
be leveraging diversified geographical operations that will fit very well in
serving the entire product life cycle of our expanded customer
base. This means we can do quick-turn and prototyping of newly
engineered products and as volumes ramp we can also provide high volume
production, at competitive prices, in both North America and
Asia. This is truly a large and unique offering. We will
have the right capacity and the right technical talents and expertise in the
right places.
The
combined company also leverages both Viasystems’ and Merix’ technology prowess,
our reputation for and philosophies regarding high quality, our deep customer
relationships, and our proven operational expertise.
By
utilizing the best of both companies, we can also build on our extensive
industry experience to expand into complementary market segments, like Aerospace
and Defense, and greater market opportunities in the electro mechanical
space.
We expect
the combined business to capitalize on the mutual strengths of both
organizations. These competitive strengths also come with improved
manufacturing efficiencies enabling us to target $20 million in expense
synergies on an annualized basis.
Overview:
So let me
give a brief overview of the company that will emerge from this transaction,
including several of the strategic benefits that will enable us to become even
more competitive in the marketplace.
First,
the merger will allow us to leverage the large-scale production and quick-turn
capabilities of both companies in order to expand our revenue opportunities with
a large and diversified customer base. Specifically, on the
Viasystems side, we bring a well established customer base of more than 125
original equipment manufacturers that serve numerous end
markets. This includes many large, well-known industry
leaders.
Merix
also supplies a very broad base of approximately 800 customers. While there is
some overlap and we do compete in similar end markets, for the most part, we
serve different customers. Among the top 10 customers of both
companies, there are only three overlapping customers. So therefore,
the combination will have the desirable effect of significantly diversifying our
business over a larger customer base.
We will
also benefit from a broader global presence. Viasystems is primarily
a high-volume producer in China. Merix, in addition to high-volume
production in multiple facilities in Asia, also has substantial North American
quick-turn and high-volume production capabilities. Merix’ North
American assets will better enable market penetration and expansion into the
growing and profitable military and aerospace industries. Certainly,
we expect to add volume and bring operating efficiencies to many of these
operations.
One of
the most important mutual strengths is our distinct, yet complementary,
capabilities for prototyping and quick-turn. One example is the
quick-turn and prototyping capabilities that Merix offers in the
U.S. In addition, the company will have more diverse capabilities in
Asia for both high-production and quick-turn printed circuit board
manufacturing. We know that customers attribute great value to the
ability to provide them with a global offering that manages their service needs
through a product’s entire life cycle.
Viasystems
also provides customers with electro-mechanical solutions that are new to Merix’
service offerings. Both companies bring a reputation of high quality
and reliability, which is not necessarily a given in our market. As a result,
the combined company will be better able to take a product at the design stage
and quickly transition it for high volume manufacturing at a location that best
suits the customer’s needs.
So I
think it is clear that this is an excellent strategic fit. The
combination will substantially increase our business scale and diversify our
customer base, opening new opportunities for us. Once this
transaction is complete, no other PCB company in the world will provide the
scope of service and technology offering as will Viasystems. These
are two successful, innovative organizations coming together with one
mission: To meet the rapidly changing needs of our
customers.
By
leveraging the diversified operations and complementary technologies, as well as
employee and management skill sets of both organizations, the combined company
is well positioned in a recovering industry. We’re confident in our
plan to integrate our businesses and unlock tremendous value, creating
opportunities for employees, customers and stakeholders with a financially
stronger, more competitive enterprise.
I will
now turn the call over to Mike to discuss the terms of the deal.
Mike
Burger
Thank you
David,
As we
mentioned in the press release, there will be several steps needed to complete
this merger, including approval by Merix’ shareholders at a special meeting that
is tentatively planned for December. At this special meeting,
shareholders will be asked to approve the exchange of one Merix share for
approximately 0.11 share of newly issued Viasystems stock subject to adjustment
as a result of exercise of equity awards (including options and/or warrants)
between signing and closing.
The major
holders of Merix convertible notes have already agreed to terms for the
conversion of their holdings into cash and Viasystems stock, as we outlined in
the press release.
Another
important requirement is for the new shares of Viasystems to be registered with
the SEC. The timing of this registration is difficult to predict with
certainty, because the SEC may require a lengthy review
process. However, we will move as expeditiously as possible, and are
optimistic that we can complete the merger by the end of 2009.
The new
company will be more competitive, and will have a unique and compelling customer
offering. We will have a very manageable debt level of approximately
$215 million, with approximately $40 million in cash.
We also
see good potential for substantial synergies in terms of both revenue growth and
cost efficiencies. However, we have not factored revenue synergies
into our financial model. We are taking a conservative view at this
point.
The new
Viasystems will have approximately 20 million newly issued shares outstanding,
about 80.5 percent of which will be owned by the current owners of
Viasystems. Existing Merix shareholders will receive about 12.5
percent and Merix convertible note holders will receive approximately 7.0
percent. The major equity and note holders of both companies have
agreed to certain lock-up restrictions regarding trading of the new
shares.
So those
are the primary terms of the deal that we are recommending to our
shareholders. Let me add to David’s remarks that I am pleased that we
will be creating an exciting new business that offers great potential for our
customers, employees and stakeholders. This is an excellent strategic
fit with compelling valuation considerations that offer both companies’
stakeholders tremendous value.
We drove
this process toward Viasystems primarily as this combination uniquely validates,
accelerates and adds scale to the “value proposition” that Merix began several
years ago. This will be a company with outstanding technology and
scale, and a deep pool of talented employees. We will encourage a
culture based on a shared commitment to our customers and to each
other.
Clearly,
this combination capitalizes on our mutual strengths, including our high
quality, specialized technologies, deep and diverse customer relationships, and
proven operational capabilities. I believe that with the expanded
resources and capabilities that will be available through the joining of
Viasystems and Merix, our growth will accelerate, and we will build a
sustainable business for the long term.
Merix
First Quarter results
Let me
take a few minutes for Kelly and I to share some additional color on our fiscal
first quarter results that were separately reported today…..
Now, we
will open the call for your questions. Operator?
Q&A
Closing
(following Q&A)
Operator
turns the call back over to Mr. Sindelar.
David
Sindelar:
Thank you
again for joining us today, and for your questions. Michael, do you
have anything to add?
Michael
Burger:
We’re
excited about the possibilities for this merger, and look forward to working
toward its completion. And, thank you to everyone for joining us this
morning.
Forward-Looking
Statements
Certain statements in this communication may
constitute “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements relate to a variety of
matters, including but not limited to: the operations of the businesses of
Viasystems and Merix separately and as a combined entity; the timing and
consummation of the proposed merger transaction; the expected benefits of the
integration of the two companies; the combined company’s plans, objectives,
expectations and intentions and other statements that are not historical fact.
These statements are made on the basis of the current beliefs, expectations and
assumptions of the management of Viasystems and Merix regarding future events
and are subject to significant risks and uncertainty. Investors are cautioned
not to place undue reliance on any such forward-looking statements, which speak
only as of the date they are made. Neither Viasystems nor Merix undertakes any
obligation to update or revise these statements, whether as a result of new
information, future events or otherwise.
Actual results may differ materially from those
expressed or implied. Such differences may result from a variety of factors,
including but not limited to: legal or regulatory proceedings or other
matters that affect the timing or ability to complete the transactions as
contemplated; the possibility that the expected synergies from the proposed
merger will not be realized, or will not be realized within the anticipated time
period; the risk that the businesses will not be integrated successfully; the
possibility of disruption from the merger making it more difficult to maintain
business and operational relationships; the possibility that the merger does not
close, including but not limited to, due to the failure to satisfy the closing
conditions; any actions taken by either of the companies, including but not
limited to, restructuring or strategic initiatives (including capital
investments or asset acquisitions or dispositions), developments beyond the
companies’ control, including but not limited to, changes in domestic or global
economic conditions, competitive conditions and consumer preferences, adverse
weather conditions or natural disasters, health concerns, international,
political or military developments, and technological developments. Additional
factors that may cause results to differ materially from those described in the
forward-looking statements are set forth in the Annual Report on Form 10-K of
Viasystems, Inc. for the year ended December 31, 2008, which was filed with the
Securities and Exchange Commission (“SEC”) on March 30, 2009, under the heading
“Item 1A. Risk Factors” and in the Annual Report on Form 10-K of Merix for the
year ended May 30, 2009, which was filed with the SEC on July 30, 2009, under
the heading “Item 1A. Risk Factors,” and in each company’s other filings made
with the SEC available at the SEC’s website, www.sec.gov.
Important Merger Information and
Additional Information
This document does not constitute an offer to
sell or the solicitation of an offer to buy any securities or a solicitation of
any vote or approval. In connection with the proposed transaction, Viasystems
and Merix will file relevant materials with the SEC. Viasystems will file
a Registration Statement on Form S-4 that includes a proxy statement of Merix
and which also constitutes a prospectus of Viasystems. Merix will mail the
proxy statement/prospectus to its shareholders.
Investors are urged to read the proxy
statement/prospectus regarding the proposed transaction when it becomes
available, because it will contain important information.
The proxy
statement/prospectus and other documents that will be filed by Viasystems and
Merix with the SEC will be available free of charge at the SEC’s website,
www.sec.gov, or by directing a request when such a filing is made to Merix
Corporation, 15725 SW Greystone Court, Suite 200, Beaverton Oregon 97006,
Attention: Investor Relations or by directing a request when such a filing is
made to Viasystems Group, Inc., 101 South Hanley Road, Suite 400, St. Louis,
Missouri 63105, Attention: Investor Relations.
Participants in Solicitation
Viasystems, Merix, their respective directors
and certain of their executive officers may be considered participants in the
solicitation of proxies in connection with the proposed transaction.
Information about the directors and executive officers of Merix is set forth in
Merix’s definitive proxy statement, which was filed with the SEC on August 26,
2009. Information about the directors and executive officers of Viasystems
is set forth in the Form 10-K of Viasystems, Inc., which was filed with the SEC
on March 30, 2009. Investors may obtain additional information regarding
the interests of such participants by reading the proxy statement/prospectus
Viaystems and Merix will file with the SEC when it becomes available.
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