Centillium Communications (NASDAQ:CTLM)
Historical Stock Chart
From Jul 2019 to Jul 2024
TranSwitch®
Corporation (NASDAQ: TXCC), today announced that it has entered into a
definitive agreement to acquire Centillium Communications, Inc. (“Centillium”)
(Nasdaq:CTLM). With this acquisition, TranSwitch, a leading provider of
carrier-class semiconductor solutions for EoS (Ethernet over SONET/SDH),
Broadband Access and Carrier Ethernet applications, will further
diversify its product portfolio to include rapidly growing
Fiber-to-the-Home (“FTTH”)
and Voice-over-Internet-Protocol (“VoIP”)
solutions.
The combination strengthens TranSwitch’s
leadership position in the next-generation communications semiconductor
market. The combined companies will have greater scale, a significantly
improved expense structure and a truly global reach. Management of
TranSwitch has identified approximately $10.5 million of annual expense
savings and expects the transaction to be accretive to earnings in the
first full quarter after closing and significantly accretive in 2009.
Under the terms of the agreement, TranSwitch will issue an aggregate of
25 million shares of common stock and $15 million, which will be
allocated pro rata among holders of Centillium common stock and vested,
in-the-money, stock options outstanding at the closing of the merger.
Based on Centillium’s capitalization as of
July 9, 2009, Centillium shareholders would receive 0.5958 shares
of TranSwitch common stock and $0.36 in cash for each share of
Centillium common stock. Based on TranSwitch’s
closing share price on July 9, 2008, the total consideration values
Centillium at $42.8 million or approximately $1.02 per
share on a fully-diluted basis. Centillium shareholders will own
approximately 16% of the combined company.
“We are delighted to welcome Centillium’s
customers, employees and shareholders to join the TranSwitch team said
Dr. Santanu Das, CEO of TranSwitch. “Centillium
has a large number of important customers including Alcatel-Lucent, OKI,
Samsung, ZTE and Tellabs. Their products have won significant industry
recognition, and their Mustang chip is currently being used in OKI’s
ONU platform which is part of NTT’s EPON
based FTTH deployment. We are particularly excited about Centillium’s
second recent design win in the FTTH platform of a second prominent
supplier for this deployment. This platform is currently being qualified
and we anticipate a ramp in early 2009. The Japanese government has made
a major commitment to rolling out FTTH, and NTT’s
goal is to reach 20 million homes by 2010. This represents a major
revenue opportunity for the company.”
“This combination further strengthens
TranSwitch’s position in the platforms of
Tier-1 equipment suppliers with contracts at carriers that have made
significant financial commitments to upgrade their current
infrastructures. These contracts include carriers in the UK, Korea,
China, India and now Japan,” continued Dr.
Santanu Das. “We believe that as these
deployments begin to ramp in volume, the combined company has the
potential to significantly increase its revenue in 2009. As a larger
company, we will enjoy a significantly better expense structure as well
as stronger relationships with both customers and suppliers.”
"We are very pleased to be joining the TranSwitch team," said Faraj
Aalaei, Co-Founder and CEO of Centillium, who will also serve on
TranSwitch’s board upon closing of the
transaction. "Consolidation in the communications industry is both good
and necessary, and the combined company will be significantly stronger
and more profitable than either one by itself.”
“Centillium shares TranSwitch’s
culture of strong focus on product innovation, engineering excellence
and best-in-class customer support. This is evident in the deep customer
relationships both companies enjoy,”
concluded Mr. Aalaei.
About the Transaction
The boards of directors of both companies have unanimously approved the
transaction which is subject to customary closing conditions, including
the approval of Centillium’s shareholders.
The transaction is expected to close in the fourth quarter of 2008. Upon
completion of the transaction, TranSwitch will have approximately 158
million fully diluted shares outstanding, with current TranSwitch
shareholders owning approximately 84% and current Centillium
shareholders owning approximately 16% of the combined company's shares.
Thomas Weisel Partners LLC, Signal Hill Capital Group LLC, and Northland
Securities, Inc. served as financial advisors to TranSwitch. Pagemill
Partners served as financial advisor to Centillium.
Conference Call on July 9, 2008
Management will be hosting a webcast conference call today, July 9, 2008
at 5:00 p.m. EDT that will be accessible on the Transwitch’s
website under the Investor Relations and Webcasts section at www.transwitch.com.
To listen to the conference call live by telephone, dial 1-719-955-1425
and enter access code 730024 approximately ten minutes before the start
time. A telephone playback will be available after the completion of the
call and can be accessed by calling 1-719-884-8882 and using the access
code 730024. A replay of the webcast will be available for 10 business
days.
About TranSwitch Corporation
TranSwitch Corporation (Nasdaq: TXCC) designs, develops and markets
innovative semiconductors that provide core functionality and complete
solutions for voice, data and video communications network equipment. As
a leading supplier to telecom, datacom, cable television and wireless
markets, TranSwitch customers include the major OEMs that serve the
worldwide public network, the Internet, and corporate Wide Area Networks
(WANs). TranSwitch devices are inherently flexible, many incorporating
embedded programmable microcontrollers to rapidly meet customers’
new requirements or evolving network standards by modifying a function
via software instruction. TranSwitch implements global communications
standards in its VLSI solutions and is committed to providing
high-quality products and services. TranSwitch, Shelton, CT, is an ISO
9001:2000 registered company. For more information, visit www.transwitch.com.
About Centillium Communications Inc.
Centillium Communications, Inc. (Nasdaq: CTLM) delivers highly
innovative communications processing technology for global systems
vendors targeting service provider, enterprise and consumer markets.
Centillium's high performance Systems-on-Chip (SoC) products power
leading edge optical, Voice- over-Internet Protocol (VoIP), security and
data systems requiring top quality, highly integrated, very low power
processing solutions that help minimize the energy footprint of
communications networks. With a long heritage of technology leadership
and first-to-market product development, Centillium provides
semiconductor solutions that keep customers and end users at the
forefront of the communications evolution. Centillium is a global
company with headquarters in Fremont, CA. Additional information is
available at http://www.centillium.com.
Information set forth in this communication contains forward-looking
statements, which involve a number of risks and uncertainties. Such
forward-looking statements include, but are not limited to, statements
about the timing of the completion of the transaction, the anticipated
benefits of the transaction, including future financial and operating
results and estimated cost savings and synergies, and other statements
that are not historical facts. TranSwitch and Centillium caution readers
that any forward-looking information is not a guarantee of future
performance and that actual results could differ materially from those
contained in the forward-looking information due to various risks and
uncertainties.
These include risks and uncertainties relating to: the parties’
potential inability to complete the transaction because conditions to
the closing of the transaction may not be satisfied; the risk that the
businesses will not be integrated successfully and without delay; the
risk that the transaction may involve unexpected costs or unexpected
liabilities; uncertainties concerning the effect of the transaction on
relationships with customers, employees and suppliers of either or both
companies; risks associated with downturns in economic conditions
generally and in the telecommunications and data communications markets
and the semiconductor industry specifically; risks in product
development and market acceptance of and demand for both companies
products and products developed by the companies’
customers; risks relating to TranSwitch's indebtedness; risks of failing
to attract and retain key managerial and technical personnel; risks
associated with foreign sales and high customer concentration; risks
associated with competition and competitive pricing pressures; risks
associated with investing in new businesses; risks of dependence on
third-party VLSI fabrication facilities; risks related to intellectual
property rights and litigation; risks in technology development and
commercialization. The risks included above are not exhaustive. The
annual reports on Form 10-K, the quarterly reports on Form 10-Q, current
reports on Form 8-K, any amendments thereto, and other documents
TranSwitch and Centillium have filed and will file with the SEC contain
additional factors that could impact the company’s
businesses and financial performance. TranSwitch and Centillium
expressly disclaim any obligation or undertaking to release publicly any
updates or revisions to any such statements to reflect any change in
expectations or any change in events, conditions or circumstances on
which any such statement is based.
Important Information for Investors and Stockholders
TranSwitch expects to file a SEC Registration Statement on Form S-4, and
TranSwitch and Centillium will file a proxy statement/prospectus with
the SEC, in connection with the proposed merger. TRANSWITCH AND
CENTILLIUM URGE INVESTORS AND STOCKHOLDERS TO READ THE PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT
DOCUMENTS FILED BY EITHER PARTY WITH THE SEC BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION.
Investors and stockholders will be able to obtain the proxy
statement/prospectus and other documents filed with the SEC free of
charge at the website maintained by the SEC at www.sec.gov.
In addition, documents filed with the SEC by TranSwitch will be
available free of charge on the investor relations portion of the
TranSwitch website at www.transwitch.com.
Documents filed with the SEC by Centillium will be available free of
charge on the investor relations portion of the Centillium website at www.centillium.com.