Pinnacle Systems (NASDAQ:PCLE)
Historical Stock Chart
From Jun 2019 to Jun 2024
![Click Here for more Pinnacle Systems Charts. Click Here for more Pinnacle Systems Charts.](/p.php?pid=staticchart&s=N%5EPCLE&p=8&t=15)
Pinnacle Systems Board Reaffirms Recommendation of Pending Merger
With Avid Technology;
Rejects Unsolicited Vector Capital Proposal to Acquire One of Pinnacle's
Business Units
MOUNTAIN VIEW, Calif., July 25 /PRNewswire-FirstCall/ -- Pinnacle Systems(R),
Inc. (NASDAQ:PCLE), a leader in digital video solutions, today announced the
following additional information with respect to the pending merger transaction
with Avid Technology, Inc. (NASDAQ:AVID).
Late on Friday, July 22, 2005, Pinnacle received a letter from Vector Capital
(which has previously been referred to as "Company C" in the Joint Proxy
Statement/Prospectus filed with the SEC by Avid and Pinnacle), co-signed by
Tennenbaum Capital, offering to acquire the assets of the Business and Consumer
division of Pinnacle for $200 million in cash, subject to updated due diligence
and completion of contract negotiations.
Pinnacle's board of directors met on July 24, 2005 and after a thorough
discussion, determined to reject Vector's proposal for reasons that include the
following:
-- First, the Vector proposal is not comparable to the pending Avid
transaction. Vector offers only to buy the assets of one division
-- the division that generates most of Pinnacle's net sales and
gross profit -- with the risks and costs of the balance of the
business being left to Pinnacle and its shareholders.
-- Second, based on assumptions regarding Pinnacle's remaining cash and
the potential value of its remaining Broadcast and Professional
division, Vector suggests that the implied value of its proposal to
Pinnacle shareholders was between $418 million and $438 million;
however, when these costs and values are more realistically taken
into consideration, the value of the Vector proposal is
significantly reduced.
* The proposal overlooks significant costs -- including the
continuing operating expenses and corporate overhead,
restructuring costs, professional fees and transaction costs
that Pinnacle would bear -- and that an asset sale by Pinnacle
would not be a tax efficient structure for providing value to
Pinnacle shareholders.
* Vector has assumed a value of $100 million to $120 million for
the remaining Broadcast and Professional division of Pinnacle;
however, all risks of realizing that value would be borne by
Pinnacle shareholders.
-- Third, the proposal entails a number of significant and unacceptable
risks, including uncertainty relating to financing for the
transaction, and the negotiating uncertainties and time necessary to
pursue a succession of complex transactions and corporate
restructuring, with no assurance of success or ultimate value to
Pinnacle shareholders.
The Pinnacle board has also given further consideration to the pending
transaction with Avid. On July 13, 2005 and July 21, 2005, Avid made public
announcements concerning its results for the quarter ended June 30, 2005, and
held a publicly-webcast teleconference to explain the results and provide
further detail. The announcements indicated a shortfall in Avid's revenue and
net income for the latest quarter from previous expectations, and a reduction
in the forecast by Avid's management as to anticipated revenue and net income
in upcoming periods.
In light of that situation, Pinnacle's board of directors instructed management
and the financial advisors to Pinnacle to meet with representatives from Avid
for the purpose of investigating and understanding the causes underlying the
revenue and net income shortfall. Pinnacle's board of directors subsequently
met with management and the financial advisors to Pinnacle to review and
discuss the results of their investigation, and to review the strategic and
business considerations relating to the Avid transaction, the change in value
to Pinnacle shareholders, and other factors. Following that review and those
discussions, the Pinnacle board of directors unanimously concluded that the
proposed merger transaction with Avid remains in the best interest of
Pinnacle's shareholders.
For all of these reasons, the Pinnacle board of directors continues to
recommend that Pinnacle shareholders vote to approve the terms of the proposed
merger with Avid.
Patti Hart, Chairman of the Board of Pinnacle, said, "The board concluded that
the proposed offer from Vector Capital lacked comparability to the pending
transaction. We found the proposal to be speculative and incomplete creating
obvious risks to our shareholders. Based on these factors and our past
experience with Vector relative to certainty of funding, we continue to
strongly recommend that our shareholders vote in favor of the pending merger
with Avid."
The special meeting of Pinnacle shareholders for the purpose of voting to
approve the terms of the proposed merger with Avid remains scheduled to take
place on Wednesday, July 27, 2005, at the time and place set forth in the Joint
Proxy Statement/Prospectus previously distributed to shareholders.
Pinnacle shareholders should take note that the proposed merger would not
qualify as a reorganization for United States federal income tax purposes if
the fair market value of Avid common stock were below approximately $47 per
share at the effective time of the merger. A discussion of potential tax
consequences of the merger can be found in the Joint Proxy
Statement/Prospectus. Shareholders are urged to consult their own tax advisors
as to the specific tax consequence to them of the merger.
Pinnacle shareholders with questions or needing assistance regarding the
voting, or who wish to change their vote can call MacKenzie Partners, Inc. at
800-322-2885.
About Pinnacle Systems
Pinnacle Systems provides broadcasters and consumers with cutting-edge digital
media creation, storage, and play-back solutions for use at Home, in the Studio
and on the Air. Pinnacle Systems' award-winning digital media solutions are in
use around the world for broadcast, video and audio editing, DVD and CDR
authoring and on the Internet. A recognized industry leader, the company has
received nine prestigious Emmy Awards for its technical innovations and carries
this commitment throughout all of its product lines. Pinnacle Systems may be
reached at 650-526-1600 or at http://www.pinnaclesys.com/.
Additional Information
In connection with the pending acquisition of Pinnacle by Avid, Avid has filed
with the SEC a Registration Statement on Form S-4 containing a Joint Proxy
Statement/Prospectus, and Avid and Pinnacle have mailed to their respective
stockholders the Joint Proxy Statement/Prospectus. The Registration Statement
and the Joint Proxy Statement/Prospectus contain important information about
Avid, Pinnacle, the transaction, and related matters. Investors and security
holders are urged to read the Registration Statement and the Joint Proxy
Statement/Prospectus carefully.
Investors and security holders may obtain free copies of the Registration
Statement and the Joint Proxy Statement/Prospectus and other documents filed
with the SEC by Avid and Pinnacle through the web site maintained by the SEC at
http://www.sec.gov/.
In addition, investors and security holders may obtain free copies of the
Registration Statement and the Joint Proxy Statement/Prospectus and other
documents filed with the SEC from Avid by contacting Dean Ridlon, Investor
Relations director for Avid, at telephone number (978) 640-5309, or from
Pinnacle by contacting Deborah B. Demer of Demer IR Counsel, Inc. at telephone
number 925-938-2678, extension 224.
Avid and Pinnacle, 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
Avid's directors and executive officers is contained in Avid's Form 10-K for
the year ended December 31, 2004 and in the Joint Proxy Statement/Prospectus,
which are filed with the SEC and available free of charge as indicated above.
Information regarding Pinnacle's directors and executive officers is contained
in Pinnacle's Form 10-K for the year ended June 30, 2004 and its proxy
statement dated September 30, 2004, which are filed with the SEC and available
free of charge as indicated above. The interests of Avid's and Pinnacle's
respective directors and executive officers in the solicitations with respect
to the transactions in particular are more specifically set forth in the
Registration Statement and the Joint Proxy Statement/Prospectus filed with the
SEC, which is available free of charge as indicated above.
DATASOURCE: Pinnacle Systems, Inc.
CONTACT: Mary Dotz, Chief Financial Officer of Pinnacle Systems, Inc.,
+1-650-237-1952, or
Web site: http://www.pinnaclesys.com/