Chandler, ARIZONA - October 27, 2000 -- (NASDAQ:MCHP) -- Microchip Technology Incorporated and TelCom Semiconductor, Inc. (NASDAQ:TLCM) today announced that Microchip will acquire TelCom in a stock-for-stock transaction valued at approximately $300 million on a fully-diluted basis based on Thursday's closing prices. TelCom is a provider of a broad spectrum of high performance linear and mixed-signal integrated circuits solutions that are used worldwide in a range of applications in the wireless communications, computing, consumer electronics, networking, industrial and other markets.
Under the terms of the definitive merger agreement, if the average closing price of Microchip's common stock for the ten trading days preceding the closing of the transaction is between $28.30 and $32.61, Microchip will issue a number of shares of its common stock for each outstanding share of TelCom equal to $15.00 divided by such 10 day average price. If Microchip's ten-day average closing price prior to the merger is less than $28.30, then each TelCom stockholder will receive .53 shares of Microchip, and if the ten-day average price is greater than $32.61, then each TelCom stockholder will receive .46 shares of Microchip.
Microchip expects the transaction to be completed during the first calendar quarter of 2001 and to be immediately accretive.
"This acquisition is an important milestone for Microchip in that it greatly accelerates our internal efforts to expand our portfolio of stand-alone analog products as well as provide additional product functionality to our embedded control customers. We estimate that there is approximately $1.50 of analog product embedded around each $1.00 of our microcontrollers. One and a half years ago, we began exploiting this opportunity by building and attaching our stand-alone analog products to our microcontrollers. TelCom brings to us a highly synergistic portfolio of analog products which will accelerate our ability to capture this significant revenue opportunity," said Steve Sanghi, Microchip's President and CEO.
TelCom's high performance analog expertise will substantially expand Microchip's product initiatives and position the Company as a leading producer of power management, thermal management and other linear/mixed-signal integrated circuits. "TelCom's product position and experienced analog team accelerates our analog product roadmap by several years and gives us critical mass in all major market segments. Analog resources are very scarce in the current industry environment, and this acquisition will double our analog focused resources. Together, we will expand Microchip's analog product portfolio and accelerate our microcontroller-attach strategy much faster than we could do alone," Sanghi said.
"We are pleased to join forces with an industry leader like Microchip," said Bob Gargus, President and CEO of TelCom. "This is an excellent fit from both a customer and technology perspective. We believe our strength in analog products will further Microchip's leadership in embedded control applications. Microchip's larger sales force, much larger customer base and strong OEM and distributor relationships will significantly expand the market opportunity for TelCom's products."
TelCom will become a subsidiary of Microchip and TelCom's team of over 250 employees will become part of Microchip's existing analog product group. Microchip expects to keep all of TelCom's employees, and no reductions in workforce are expected.
The acquisition is intended to qualify as a pooling of interests for accounting purposes and to be tax-free to stockholders of TelCom. Completion of the acquisition is contingent upon approval by TelCom stockholders, on the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and on other customary conditions.
About Microchip
Microchip Technology Inc. manufactures the widely popular PICmicro® RISC microcontrollers that serve 8- and 16-bit embedded control applications. Specializing in field-programmable and mixed-signal solutions, the company also offers complementary microperipheral products including stand-alone analog, interface and microID RFID devices; serial EEPROMs; and the patented KEELOQ® security devices. This synergistic product portfolio targets thousands of applications and a growing demand for high-performance designs in the automotive, communications, computing, consumer and industrial control markets. The Company's quality systems are ISO 9001 (1994 version) and QS9000 (1998 version) certified. Microchip is headquartered near Phoenix in Chandler, with semiconductor fabrication facilities in Arizona and Washington; and assembly and test operations near Bangkok, Thailand. Microchip employs approximately 3,100 people worldwide and has sales offices throughout Asia, Europe, Japan and the Americas. More information on the Company can be found at http://www.microchip.com/.
About Telcom
TelCom Semiconductor, Inc. designs, develops and markets a broad spectrum of high-performance linear and mixed-signal integrated circuit solutions. The company's product offering is focused in three main product families: power management, thermal management, and linear/mixed signal devices. These integrated circuits are used worldwide in a range of applications in the wireless communications, computing, consumer electronics, networking, industrial and other markets. The company's revenue for 1999 was $57.3 million. Company and product information can be accessed on the company's website at http://www.telcom-semi.com/.
Forward-Looking Statements are omitted