News Article
Credence and LTX sign merger agreement
The two competitors merge to combine their strength in technical expertise and expand their product portfolio.
Credence Systems Corporation and LTX Corporation, both providers of automated test equipment (ATE) for the worldwide consumer semiconductor industry, announced that they have entered into a definitive agreement to combine the two companies in a tax free, all stock merger of equals.
Under the terms of the agreement, Credence shareholders will receive shares of LTX common stock based on an exchange ratio that will be determined at the closing of the merger to cause Credence shareholders to own 50.02% of the outstanding shares of the combined company and LTX shareholders to own 49.98% of the outstanding shares of the combined company. If the exchange ratio was calculated based on shares outstanding as of June 20, 2008, each outstanding share of Credence common stock would be converted into approximately 0.6133 shares of LTX common stock in the transaction.
Credence and LTX believe the combined strengths of the two companies will create a leading provider of focused, cost optimised solutions designed to enable customers to implement best in class test strategies to maximise their profitability. The new company will address the broad, divergent test requirements of the wireless, computing, automotive and entertainment market segments. It will offer a complementary portfolio of technologies, the largest installed base in the Asia Pacific region, and a global network of strategically deployed applications and support resources.
Under the terms of the agreement, Lavi Lev, President and CEO of Credence, will become Executive Chairman of the combined company for a transitional period following the merger. David Tacelli, CEO and President of LTX, will become CEO and President; and Mark Gallenberger, CFO and Vice President of LTX, will become CFO. Casey Eichler, Senior Vice President and CFO of Credence, has agreed to remain with the combined company through a transition period. The board of directors of the combined company will include five directors designated by LTX (including Tacelli), and four directors designated by Credence (including Lev).
"I am very excited about joining forces with LTX. This merger, from a technical and business point of view, represents the logical next step for both companies' long term growth," said Lavi Lev, President and CEO of Credence. "We believe the combined strength of our technical expertise in RF, digital, mixed signal and analogue, coupled with a complementary product portfolio, will benefit our customers as they test and deploy high volume, highly integrated devices into their respective market segments. From a business perspective, the merger broadens our customer base and provides a strong opportunity for growth."
"The technical and business challenges faced by our customers continue to intensify as time to market shrinks and margins are pressured by demands for new features at lower prices," noted David Tacelli, chief executive officer and president of LTX. "Now more than ever, it is vital we deliver cost optimised test solutions focused on our customers' specific technologies, product mix and device volume levels. We believe the timely merger of Credence and LTX enables us to build a test company with the financial strength, growth opportunities, critical mass, and operational efficiency to lead the industry as it faces these challenges."
"We expect the combination to drive efficiencies associated with operating a larger business, and we anticipate annual cost savings of approximately $25 million at the end of the integration period," noted Mark Gallenberger, CFO and Vice President of LTX. "The transaction is expected to be accretive on a non GAAP basis, excluding restructuring charges, within 12 months of combined operations and realisation of the cost savings."
The merger is subject to approval by both companies' stockholders, as well as the satisfaction of customary closing conditions and regulatory approvals. The boards of directors of both companies have unanimously approved the agreement and recommend their stockholders vote in favour of it. Pending regulatory approval, the companies expect the transaction to be completed by the end of September 2008.
Credence's financial advisor on the transaction is Lehman Brothers Inc., Morrison & Foerster LLP is acting as Credence's legal counsel, and Corp-Growth provided M&A advice to Credence. LTX's financial advisor on the transaction is J.P. Morgan Securities, and WilmerHale is acting as LTX's legal counsel.
LTX plans to file with the SEC a Registration Statement on Form S-4 in connection with the transaction and LTX and Credence plan to file with the SEC and mail to their respective stockholders a Joint Proxy Statement/Prospectus in connection with the transaction. The Registration Statement and the Joint Proxy Statement/Prospectus will contain important information about LTX, Credence, the transaction and related matters. Investors and security holders are urged to read the Registration Statement and the Joint Proxy Statement/Prospectus carefully when they are available.
LTX and Credence, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies in respect of the transactions contemplated by the merger agreement. Information regarding LTX's directors and executive officers is contained in LTX's Annual Report on Form 10-K for the fiscal year ended July 31, 2007 and its proxy statement dated November 6, 2007, which are filed with the SEC. As of June 16, 2008, LTX's directors and executive officers beneficially owned approximately 4,201,725 shares, or 6.7%, of LTX's common stock. Information regarding Credence's directors and executive officers is contained in Credence's Annual Report on Form 10-K for the fiscal year ended November 3, 2007, its proxy statement dated March 7, 2008, its Current Reports on Form 8-K filed on April 18, 2008, May 1, 2008, June 10, 2008, and June 17, 2008, and its Form 4 filed on April 29, 2008, which are filed with the SEC. As of June 16, 2008, Credence's directors and executive officers beneficially owned approximately 1,348,090 shares, or 1.3%, of Credence's common stock. In connection with the transaction, Mr. Tacelli has agreed that the transaction will not constitute a change of control for purposes of his Change of Control Employment Agreement dated March 2, 1998 and Mr. Gallenberger has agreed that the transaction will not constitute a change of control for purposes of his Change of Control Employment Agreement dated October 2, 2000. In connection with the transaction, each of Mr. Lev and Mr. Eichler has entered into a Transition Services Agreement with Credence pursuant to which they have agreed to accept new positions with Credence, and perform certain transition services for Credence, for a period of six months following the closing of the transaction in exchange for certain salary, bonus, acceleration of equity based awards and other compensation. A more complete description will be available in the Registration Statement and the Joint Proxy Statement/Prospectus.
Under the terms of the agreement, Credence shareholders will receive shares of LTX common stock based on an exchange ratio that will be determined at the closing of the merger to cause Credence shareholders to own 50.02% of the outstanding shares of the combined company and LTX shareholders to own 49.98% of the outstanding shares of the combined company. If the exchange ratio was calculated based on shares outstanding as of June 20, 2008, each outstanding share of Credence common stock would be converted into approximately 0.6133 shares of LTX common stock in the transaction.
Credence and LTX believe the combined strengths of the two companies will create a leading provider of focused, cost optimised solutions designed to enable customers to implement best in class test strategies to maximise their profitability. The new company will address the broad, divergent test requirements of the wireless, computing, automotive and entertainment market segments. It will offer a complementary portfolio of technologies, the largest installed base in the Asia Pacific region, and a global network of strategically deployed applications and support resources.
Under the terms of the agreement, Lavi Lev, President and CEO of Credence, will become Executive Chairman of the combined company for a transitional period following the merger. David Tacelli, CEO and President of LTX, will become CEO and President; and Mark Gallenberger, CFO and Vice President of LTX, will become CFO. Casey Eichler, Senior Vice President and CFO of Credence, has agreed to remain with the combined company through a transition period. The board of directors of the combined company will include five directors designated by LTX (including Tacelli), and four directors designated by Credence (including Lev).
"I am very excited about joining forces with LTX. This merger, from a technical and business point of view, represents the logical next step for both companies' long term growth," said Lavi Lev, President and CEO of Credence. "We believe the combined strength of our technical expertise in RF, digital, mixed signal and analogue, coupled with a complementary product portfolio, will benefit our customers as they test and deploy high volume, highly integrated devices into their respective market segments. From a business perspective, the merger broadens our customer base and provides a strong opportunity for growth."
"The technical and business challenges faced by our customers continue to intensify as time to market shrinks and margins are pressured by demands for new features at lower prices," noted David Tacelli, chief executive officer and president of LTX. "Now more than ever, it is vital we deliver cost optimised test solutions focused on our customers' specific technologies, product mix and device volume levels. We believe the timely merger of Credence and LTX enables us to build a test company with the financial strength, growth opportunities, critical mass, and operational efficiency to lead the industry as it faces these challenges."
"We expect the combination to drive efficiencies associated with operating a larger business, and we anticipate annual cost savings of approximately $25 million at the end of the integration period," noted Mark Gallenberger, CFO and Vice President of LTX. "The transaction is expected to be accretive on a non GAAP basis, excluding restructuring charges, within 12 months of combined operations and realisation of the cost savings."
The merger is subject to approval by both companies' stockholders, as well as the satisfaction of customary closing conditions and regulatory approvals. The boards of directors of both companies have unanimously approved the agreement and recommend their stockholders vote in favour of it. Pending regulatory approval, the companies expect the transaction to be completed by the end of September 2008.
Credence's financial advisor on the transaction is Lehman Brothers Inc., Morrison & Foerster LLP is acting as Credence's legal counsel, and Corp-Growth provided M&A advice to Credence. LTX's financial advisor on the transaction is J.P. Morgan Securities, and WilmerHale is acting as LTX's legal counsel.
LTX plans to file with the SEC a Registration Statement on Form S-4 in connection with the transaction and LTX and Credence plan to file with the SEC and mail to their respective stockholders a Joint Proxy Statement/Prospectus in connection with the transaction. The Registration Statement and the Joint Proxy Statement/Prospectus will contain important information about LTX, Credence, the transaction and related matters. Investors and security holders are urged to read the Registration Statement and the Joint Proxy Statement/Prospectus carefully when they are available.
LTX and Credence, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies in respect of the transactions contemplated by the merger agreement. Information regarding LTX's directors and executive officers is contained in LTX's Annual Report on Form 10-K for the fiscal year ended July 31, 2007 and its proxy statement dated November 6, 2007, which are filed with the SEC. As of June 16, 2008, LTX's directors and executive officers beneficially owned approximately 4,201,725 shares, or 6.7%, of LTX's common stock. Information regarding Credence's directors and executive officers is contained in Credence's Annual Report on Form 10-K for the fiscal year ended November 3, 2007, its proxy statement dated March 7, 2008, its Current Reports on Form 8-K filed on April 18, 2008, May 1, 2008, June 10, 2008, and June 17, 2008, and its Form 4 filed on April 29, 2008, which are filed with the SEC. As of June 16, 2008, Credence's directors and executive officers beneficially owned approximately 1,348,090 shares, or 1.3%, of Credence's common stock. In connection with the transaction, Mr. Tacelli has agreed that the transaction will not constitute a change of control for purposes of his Change of Control Employment Agreement dated March 2, 1998 and Mr. Gallenberger has agreed that the transaction will not constitute a change of control for purposes of his Change of Control Employment Agreement dated October 2, 2000. In connection with the transaction, each of Mr. Lev and Mr. Eichler has entered into a Transition Services Agreement with Credence pursuant to which they have agreed to accept new positions with Credence, and perform certain transition services for Credence, for a period of six months following the closing of the transaction in exchange for certain salary, bonus, acceleration of equity based awards and other compensation. A more complete description will be available in the Registration Statement and the Joint Proxy Statement/Prospectus.
