- Adds scale with increased presence in attractive SOC test
market
- Combines highly complementary products, markets, customers and
channels
- Expects annualized synergies of at least $25 million, following
the completion of the integration
- Verigy announces odd-lot and share repurchase programs and
holding company reorganization
Verigy (NASDAQ: VRGY) and LTX-Credence Corporation (NASDAQ:
LTXC) today announced that they have entered into a definitive
merger agreement that would create a semiconductor test company
with the scale and presence to provide comprehensive solutions to
customers across most major semiconductor market segments. The
combined company, to be called Verigy, will feature a portfolio of
leading semiconductor test systems consisting of innovative and
cost-optimized test platforms that address the broad, divergent
requirements of the wireless, graphics, computing, automotive,
industrial, and entertainment markets.
With an expanded product portfolio, strong share position in
target segments and large support network through a direct support
team and key strategic partners such as Spirox in Taiwan and China,
the new Verigy expects to be well-positioned to deliver significant
value to customers, shareholders and employees. By combining two of
the industry's most highly skilled and experienced R&D teams
under a common focus and direction, Verigy anticipates creating a
stronger, more competitive innovator of test cell solutions that
enable semiconductor manufacturers to meet time-to-market and
cost-of-test demands.
Verigy president and COO, Jorge Titinger, and LTX-Credence
president and CEO, David Tacelli, will serve as co-CEOs of the new
company, which will be headquartered in Singapore with U.S.
headquarters in Cupertino, California. Verigy chairman and CEO,
Keith Barnes, will continue as the chairman of the board of
directors, which will be comprised of 12 members, seven designated
by Verigy and five by LTX-Credence. Furthermore, to facilitate the
leadership change, Keith Barnes will transition from Verigy CEO to
Verigy chairman of the board of directors as of Dec. 31, 2010, and
Jorge Titinger will be promoted to Verigy CEO and president.
"The two companies share a long legacy of innovation in test
solutions that meet customers' technology needs and enable them to
maximize profitability and competitiveness," said Keith Barnes,
Verigy chairman and CEO. "By joining forces, we expect the combined
scale to strengthen our global presence, realize significant
synergies and provide substantial benefits to our customers,
shareholders and employees."
"Verigy has a well-established presence in the high-performance
digital, complex mixed-signal and RF-SOC segments while
LTX-Credence has a broad SOC market footprint and expertise in
cost-optimized solutions," said Jorge Titinger, Verigy president
and COO. "We expect the combination will enable the new Verigy to
drive sustainable long-term growth and shareholder value through
the expansion of our product and technology portfolio as well as
our existing customer relationships. We are very excited by the
possibilities that this new company represents."
"Strategically, the complementary fit of Verigy and LTX-Credence
makes us ideal merger partners, and we believe this combination
will position the new Verigy for market leadership in the
semiconductor test industry," said David Tacelli, LTX-Credence
president and CEO. "We look forward to working together to build a
new company structured for consistent, strong financial
performance."
Transaction Terms
Under the terms of the agreement, the transaction will either be
effected through a reorganization where Verigy and LTX-Credence
would be wholly owned subsidiaries of Holdco, a newly created
subsidiary, or through a merger where LTX-Credence would become a
wholly owned subsidiary of Verigy. LTX-Credence shareholders will
receive a fixed exchange ratio of 0.96 shares of Verigy stock or
Holdco stock for each share of LTX-Credence stock. Upon closing,
Verigy or Holdco, as applicable, will issue approximately 49
million shares on a fully diluted basis to complete the
transaction. At that time, Verigy and LTX-Credence shareholders
will own approximately 56 percent and 44 percent, respectively, of
the combined company.
The combined company also expects to realize substantial
synergies within one year of the close of the deal, with annual
cost savings expected to reach at least $25 million, primarily from
increased efficiencies in manufacturing and reduced operating
expenses.
The transaction is subject to the approval of shareholders from
both companies as well as other customary closing conditions and
regulatory approvals. The companies expect the transaction to close
in the first half of calendar 2011.
Shares of the combined company will trade on the NASDAQ under
the symbol "VRGY." Morgan Stanley acted as financial advisor and
Wilson Sonsini Goodrich & Rosati acted as legal counsel to
Verigy. J.P. Morgan acted as financial advisor and WilmerHale acted
as legal counsel to LTX-Credence.
Verigy Odd Lot and Repurchase Program
Verigy also announced today its board of directors has
authorized an odd lot program that will result in the purchase of
approximately 2.3 million shares, or 4 percent of Verigy's current
outstanding shares, from shareholders holding less than 100 shares
of the combined company following the transaction. This is expected
to simplify the combined company's capital structure. In addition,
Verigy's board has authorized an annual stock repurchase program of
up to 10 percent of the Verigy's current outstanding shares,
effective for approximately 12 months following the transaction.
The repurchases are expected to be funded from available cash and
short-term investments. The odd lot repurchase and stock repurchase
program are both subject to shareholder approval at Verigy's next
shareholder meeting.
Conference Call and Webcast
Information
Verigy and LTX-Credence will host a joint teleconference today
at 5:30 AM PST to discuss the transaction, which will include
formal remarks by Messrs. Barnes, Titinger and Tacelli, followed by
a question-and-answer session. Participants should call
1-888-680-0878 (international callers, please use +617-213-4855 and
provide the conference code 71343179 to secure a guaranteed line).
Interested parties who are not available for the teleconference
will have access to a replay of the call from approximately 10:30
AM PST on Nov. 18 until Noon, Dec. 2, 2010. The replay will be
accessible by dialing 1-888-286-8010 (international callers, please
use +617-801-6888) and entering conference code 11544361.
Additionally, the webcast can be accessed at
http://investor.verigy.com/ and
http://investor.ltx-credence.com/.
About Verigy
Verigy provides advanced semiconductor test systems and
solutions used by leading companies worldwide in design validation,
characterization, and high-volume manufacturing test. Verigy offers
scalable platforms for a wide range of system-on-chip (SOC) test
solutions, and memory test solutions for Flash, DRAM including
high-speed memories, as well as multi-chip packages (MCP). Verigy
also provides advanced analysis tools that accelerate design debug
and yield ramp processes. Additional information about Verigy can
be found at www.verigy.com.
About LTX-Credence
LTX-Credence is a global provider of ATE solutions designed to
deliver value through innovation enabling customers to implement
best-in-class test strategies to maximize their profitability.
LTX-Credence addresses the broad, divergent test requirements of
the wireless, computing, automotive and entertainment market
segments, offering a comprehensive portfolio of technologies, the
largest installed base in the Asia-Pacific region, and a global
network of strategically deployed applications and support
resources. Additional information can be found at www.ltxc.com.
Additional Information and Where You Can Find
It
This communication may be deemed to be solicitation material in
respect of the proposed transaction between Verigy and
LTX-Credence. In connection with the transaction, Verigy and Holdco
will file a registration statement on Form S-4 with the SEC
containing a joint proxy statement/prospectus. The joint proxy
statement/prospectus will be mailed to the shareholders of Verigy
and LTX-Credence. Investors and shareholders of Verigy and
LTX-Credence are urged to read the registration statement and joint
proxy statement/prospectus when it becomes available because it
will contain important information about Verigy, Holdco,
LTX-Credence and the proposed transaction. The registration
statement and joint proxy statement/prospectus (when they become
available), and any other documents filed by Verigy, Holdco or
LTX-Credence with the SEC, may be obtained free of charge at the
SEC's website at www.sec.gov. In addition, investors and security
holders may obtain free copies of the documents filed with the SEC
by Verigy and LTX-Credence by contacting, respectively, Verigy
Investor Relations by e-mail at judy.davies@verigy.com or by
telephone at 1-408-864-7549 or by contacting LTX-Credence Investor
Relations by e-mail at rich_yerganian@ltxc.com or by telephone at
1-781-467-5063. Investors and security holders are urged to read
the registration statement, joint proxy statement/prospectus and
the other relevant materials when they become available before
making any voting or investment decision with respect to the
proposed transaction. Verigy, LTX-Credence and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from their shareholders in favor of
the proposed transaction. Information about the directors and
executive officers of Verigy and LTX-Credence and their respective
interests in the proposed transaction will be available in the
joint proxy statement/prospectus. Additional information regarding
the Verigy directors and executive officers is also included in
Verigy's proxy statement for its 2010 Annual Meeting of
Shareholders, which was filed with the SEC on February 23, 2010. As
of February 12, 2010, Verigy's directors and executive officers
beneficially owned approximately 1,595,151 shares, or 2.7 percent,
of Verigy's ordinary shares. Additional information regarding the
LTX-Credence directors and executive officers is also included in
LTX-Credence's proxy statement for its 2011 Annual Meeting of
Stockholders, which was filed with the SEC on November 8, 2010. As
of September 30, 2010, LTX-Credence's directors and executive
officers beneficially owned approximately 1,940,204 shares, or 3.9
percent, of LTX-Credence's common stock. These documents are
available free of charge at the SEC's web site at www.sec.gov and
from Verigy and LTX-Credence, respectively, at the e-mail addresses
and phone numbers listed above.
Cautionary Statement Regarding Forward-Looking
Statements
This document contains forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These statements are based on
management's current expectations and beliefs and are subject to a
number of factors and uncertainties that could cause actual results
to differ materially from those described in the forward-looking
statements. The forward-looking statements contained in this
document include the strength of the combined company's financial
position and global presence; future financial and operating
results; our expectations about the ability of the combined company
to deliver significant value and substantial benefits to our
customers, shareholders and employees; the ability of the combined
company to be a stronger, more competitive innovator of test cell
solutions, to drive sustainable long-term growth and to be a major
challenger for leadership in the semiconductor test industry;
expectations of meeting customers' technology needs that enable
them to maximize profitability and competitiveness; potential
synergies, including the timing of the realization of such
synergies; expectations about the combined company's leadership and
board composition; the ability of the combined company to drive and
sustain long-term growth and shareholder value; anticipated
expansion of product and technology portfolio as well as customer
and partner relationships; and other statements regarding the
proposed transaction. Any statements that are not statements of
historical fact (including statements containing the words
"believes," "should," "plans," "anticipates," "expects,"
"estimates" and similar expressions) should also be considered to
be forward-looking statements. These statements are not guarantees
of future performance, involve certain risks, uncertainties and
assumptions that are difficult to predict, and are based upon
assumptions as to future events that may not prove accurate.
Therefore, actual outcomes and results may differ materially from
what is expressed herein. For example, if Verigy and LTX-Credence
do not each receive required shareholder approval or the parties
fail to satisfy other conditions to closing, the transaction will
not be consummated. In any forward-looking statement in which
Verigy or LTX-Credence expresses an expectation or belief as to
future results, such expectation or belief is expressed in good
faith and believed to have a reasonable basis, but there can be no
assurance that the statement or expectation or belief will result
or be achieved or accomplished. The following factors, among
others, could cause actual results to differ materially from those
described in the forward-looking statements: failure of the Verigy
and LTX-Credence shareholders to approve the proposed merger; the
challenges and costs of closing, integrating, restructuring and
achieving anticipated synergies; the ability to retain key
employees; and other economic, business, competitive, and/or
regulatory factors affecting the businesses of Verigy and
LTX-Credence generally, including those set forth in the filings of
Verigy and LTX-Credence with the Securities and Exchange
Commission, especially in the "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" sections of their respective annual reports on Form
10-K and quarterly reports on Form 10-Q, their current reports on
Form 8-K and other SEC filings. Verigy and LTX-Credence are under
no obligation to (and expressly disclaim any such obligation to)
update or alter any forward-looking statements as a result of
developments occurring after the date of this press release.
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VERIGY CONTACT: Judy Davies VP, Investor Relations and
Marketing Communications +1 408-864-7549 Email Contact
LTX-CREDENCE CONTACT: Rich Yerganian VP, Investor Relations
and Corporate Marketing +1 781-467-5063 Email Contact
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