Filed by Alpha Industries, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
Commission File Number: 001-05560
Subject Company: Conexant Systems, Inc.
Commission File Number: 000-24923
Alpha Industries will file a proxy statement/prospectus and other relevant
documents concerning the proposed merger of Conexant's wireless business
with and into Alpha Industries with the SEC. Investors and security holders
are advised to read the proxy statement/prospectus and other relevant
documents filed by Alpha Industries with the SEC regarding the proposed
merger referenced in the foregoing information when they become available
because they will contain important information. Investors and security
holders may obtain a free copy of the documents regarding the proposed
merger (when available) and other documents filed by Alpha Industries at
the SEC's web site at www.sec.gov. The documents regarding the proposed
merger and such other documents may also be obtained from Alpha Industries
directing such request to Alpha Industries, Inc., Attn: Paul E. Vincent, 20
Sylvan Road, Woburn, MA, 01801.
Alpha Industries and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from Alpha Industries'
shareholders. A list of the names of the directors and executive officers
and descriptions of their interests in Alpha Industries is contained in
Alpha Industries' proxy statement dated July 30, 2001, which is filed with
the SEC and will also be included in future proxy statements filed with the
SEC. Shareholders may obtain additional information about the interest of
the directors and executive officers in this transaction by reading the
proxy statement/prospectus when it is available.
THE FOLLOWING IS THE PRESS RELEASE DISSEMINATED BY ALPHA INDUSTRIES ON
DECEMBER 17, 2001
Alpha Contact: Conexant Contacts:
Paul E. Vincent Editorial
Chief Financial Officer Gwen Carlson
(781) 935-5150, ext. 4438 (949) 483-7363
Investor Relations
Thomas Schiller
(949) 483-2698
ALPHA AND CONEXANT'S WIRELESS BUSINESS MERGE TO CREATE THE PURE-PLAY LEADER
IN MOBILE COMMUNICATIONS SEMICONDUCTORS
New Company Uniquely Positioned to Drive the Evolution of RF and Complete
System Solutions For 2.5G and 3G Applications
WOBURN, Mass., and NEWPORT BEACH, Calif., Dec. 17, 2001 - Alpha Industries,
Inc., (Nasdaq: AHAA) and Conexant Systems, Inc., (Nasdaq: CNXT) today
announced the signing of a definitive agreement that will combine
Conexant's wireless business with Alpha to create the pure-play world
leader in radio frequency (RF) and complete semiconductor system solutions
for mobile communications applications.
Combining the wireless technology and product portfolios of the
two companies will uniquely position the new entity to drive the evolution
of RF integration for all major air interfaces, including CDMA and GSM, and
complete semiconductor and software solutions for advanced 2.5G and 3G
applications.
David Aldrich, Alpha president and chief executive officer, will
be chief executive officer of the new company and Dwight W. Decker,
Conexant chairman and chief executive officer, will serve as chairman of
the board of directors. Alpha and Conexant will have equal representation
on the board of directors of the new company.
The new company would have approximately 140 million fully diluted
shares outstanding, with current Alpha shareholders owning approximately 33
percent and current Conexant shareholders owning approximately 67 percent
of the combined company's shares on a fully diluted basis. The combined
company would be valued at approximately $3 billion, based on Alpha's
December 14 closing price of $21.20 per share.
Under the terms of the agreement, Conexant will spin-off its
wireless business, including its GaAs wafer fabrication facility located in
Newbury Park, Calif., to be followed immediately by a merger of this
business with Alpha. Upon completion of the merger, the new company will
purchase Conexant's semiconductor assembly, module manufacturing and test
facility, located in Mexicali, Mexico, for $150 million in cash.
The merged company will have executive offices in Woburn, Mass. and Newport
Beach, Calif., and will employ approximately 4,000 people worldwide. It
will operate under a new name and stock ticker symbol that will be
announced within the next few months.
"Success in today's wireless semiconductor industry increasingly
demands a comprehensive portfolio of technology and products," said David
Aldrich. "This merger of two highly complementary wireless businesses will
create the world's pure-play leader in mobile communications
semiconductors, with the industry's broadest technology capability and most
complete product offering.
"For RF systems, this portfolio will include combination switch
and filter products, multi-chip power-amplifier modules, and highly
integrated transmit-and-receive devices for all major air-interface
standards," Aldrich continued. "For complete handset systems, the combined
company will deliver the world's most comprehensive 2.5G GSM/GPRS solution,
including the complete radio as well as all baseband processing, protocol
stack and user interface software, plus complete reference designs and
development platforms. For infrastructure applications, we are excited
about the opportunity to leverage Conexant's integrated RF product and
technology capabilities across Alpha's existing strong channel
relationships and broad customer engagements."
"Conexant has viewed wireless communications as a core investment,
and over the past five years this business has grown from approximately $50
million in annual revenues to more than $250 million this year," said
Dwight Decker. "With Alpha's proven track record of product execution and
operational excellence, we strongly believe this merger will create a
company that is capable of even greater long-term success.
"Together, the merger partners sell to virtually every key
wireless OEM, including the world's top 10 handset manufacturers," Decker
continued. "In fact, as a result of the merger, the new company's top four
handset customers will consist of Nokia, Motorola, Sony/Ericsson and
Samsung, the world's largest handset OEMs, and the company's top four
infrastructure customers will be Ericsson, Motorola, Nokia and Nortel, the
world's largest infrastructure OEMs.
The new company will have an expanded GaAs wafer manufacturing
capability, including both PHEMT and InGaP HBT, for RF switch and
power-amplifier applications. In addition, the company will have long-term
assured access to Conexant's advanced SiGe and BiCMOS wafer manufacturing
for integrated RF applications. The company will also own a high-volume,
low-cost RF module assembly and test facility that has manufactured nearly
150 million power-amplifier modules to date.
"The new company will have access to all critical RF specialty
process technologies, and will be unique in its capabilities for both PHEMT
and HBT manufacturing," said David Aldrich. "Also, the addition of
Conexant's industry-leading module manufacturing and test facility will
bring significant economies of scale to the combined company."
The boards of directors of both companies have approved the
definitive agreement. Under the terms of the transaction, Alpha
shareholders will receive one share and Conexant shareowners will receive
0.342 of a share in the new company. The transaction is subject to
customary regulatory approvals, receipt of a ruling by the IRS that the
Conexant wireless business spin-off qualifies as tax-free, and an Alpha
shareholder vote to approve the merger. The transaction is expected to be
completed in the second quarter of calendar 2002.
Note to Editors, Analysts and Investors
Alpha and Conexant will be holding a conference call to discuss the merger
agreement. The call will take place on Monday, Dec. 17, 2001 at 6:00 a.m.
PST, 9 a.m. EST. To listen to the conference call via telephone, please
call 800-680-9685 (domestic) or 334-323-7242 (international), security
code: USA. To listen via the Internet, please visit www.alphaind.com,
www.conexant.com, or www.ccbn.com. Playback of the conference call will
begin at 9:00 a.m. PST on Monday, Dec. 17, and end at 5:00 p.m. PST on
Friday, Dec. 21. The replay will be available on Alpha's web site at
www.alphaind.com, or at Conexant's web site at www.conexant.com, or by
calling 800-858-5309 (domestic) or 334-323-9869 (international), access
code: 40313, pass code 16809.
Security Legend
Alpha Industries intends to file a registration statement with the
Securities and Exchange Commission in connection with the transaction, and
to mail a proxy statement/prospectus and other relevant documents to Alpha
shareholders. Investors are urged to read the proxy statement/prospectus
and other relevant documents when they become available, because they will
contain important information about Conexant, Alpha and the proposed
transaction. Shareholders will be able to obtain the documents filed with
the Commission free of charge at the Web site maintained by the Commission
at www.sec.gov. In addition, shareholders may obtain documents filed with
the Commission by Alpha free of charge by requesting them in writing from
Alpha Industries, Inc., 20 Sylvan Road, P.O. Box 1044, Woburn, MA 01801,
Attention: Investor Relations, or by telephone at (781) 935-5150, ext. 5.
Alpha Industries, Inc. and its directors and executive officers
may be deemed participants in the solicitation of proxies from Alpha
Industries shareholders. A list of the names of those directors and
officers and descriptions of their interests in Alpha Industries will be
contained in Alpha Industries proxy statement/prospectus when it becomes
available.
About Alpha
Alpha Industries is a leading provider of RF integrated
circuit-based solutions, including semiconductors and ceramic components,
for the wireless and broadband communications markets. Alpha's switches,
power amplifiers and discrete semiconductors are used by the world's
leading broadband, infrastructure and wireless communications companies to
enhance the speed, quality and performance of voice, data and video. The
company's Alpha Integration Platform(TM) (aiIP(TM)) is a breakthrough
manufacturing, packaging and design technique that reduces design
complexity and improves the OEM's overall time to market for new products.
For more information, please visit Alpha's Web site, www.alphaind.com.
About Conexant
Conexant Systems, Inc. is a worldwide leader in semiconductor system
solutions for communications applications. Conexant leverages its expertise
in mixed-signal processing to deliver integrated systems and semiconductor
products through two separate businesses: Conexant and Mindspeed
Technologies.
Conexant's personal networking business is focused on wireless
communications, digital infotainment and personal computing products that
are used in mobile communications and the broadband digital home. Mindspeed
Technologies designs, develops and sells a complete portfolio of
semiconductor networking solutions that facilitate the aggregation,
transmission and switching of data, video and voice from the edge of the
Internet to linked metropolitan area networks and long-haul networks.
Conexant, headquartered in Newport Beach, Calif., delivered revenues of
$1.1 billion for fiscal 2001, and has approximately 6,900 employees
worldwide. The company is a member of the S&P 500 and Nasdaq-100 indices.
To learn more, visit us at www.conexant.com or www.mindspeed.com.
Safe Harbor Statement
This press release contains statements relating to future results of
Conexant Systems, Inc. and Alpha Industries, Inc. (including certain
projections and business trends) that are "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995. Actual
results may differ materially from those projected as a result of certain
risks and uncertainties. For Conexant, these risks and uncertainties
include, but are not limited to: global economic and market conditions,
such as the cyclical nature of the semiconductor industry and the markets
addressed by the company's and its customers' products; demand for and
market acceptance of new and existing products; successful development of
new products; the timing of new product introductions; the availability and
extent of utilization of manufacturing capacity; pricing pressures and
other competitive factors; changes in product mix; fluctuations in
manufacturing yields; product obsolescence; the ability to develop and
implement new technologies and to obtain protection for the related
intellectual property; the successful planned disposition of certain
assets; the successful separation of Conexant's Internet infrastructure and
personal networking businesses; the successful merger of Conexant's
wireless business with Alpha; the ability to attract and retain qualified
personnel; labor relations of Conexant, its customers and suppliers; and
the uncertainties of litigation, as well as other risks and uncertainties,
including but not limited to the security and safety risks of Conexant's
employees and of Conexant facilities and those risks and uncertainties
detailed from time to time in Conexant's Securities and Exchange Commission
filings. For Alpha, factors include, but are not limited to: the successful
merger of Alpha with Conexant's wireless business, the cancellation or
postponement of customer orders, the ability to provide advantageous cycle
times and a range of product offerings, inability to predict customer
orders, the disproportionate impact of Alpha's business relationships with
its larger customers, difficulty manufacturing products in sufficient
quantity and quality, erosion of selling prices or margins, modification of
Alpha's plans or intentions, and market developments, competitive pressures
and changes in economic conditions that vary from Alpha's expectations.
Additional information on these and other factors that may cause actual
results and Alpha's performance to differ materially is included in the
Alpha's periodic reports filed with the SEC, including but not limited to
Alpha's Form 10-K for the year ended April 1, 2001 and subsequent Forms
10-Q. Copies may be obtained by contacting Alpha or the SEC. Alpha cautions
readers not to place undue reliance upon any forward-looking statements,
which speak only as of the date made. Alpha does not undertake or accept
any obligation or undertaking to release publicly any updates or revisions
to any forward-looking statement to reflect any change in Alpha's
expectations or any change in events, conditions or circumstance on which
any such statement is based. These forward-looking statements are made only
as of the date hereof, and the companies undertake no obligation to update
or revise the forward-looking statements, whether as a result of new
information, future events or otherwise.
Note to Editors: Conexant and Mindspeed are trademarks of Conexant Systems,
Inc. Other brands and names contained in this release are the property of
their respective owners.
Glossary of Terms
BiCMOS (bipolar complementary metal oxide semiconductor) -- a type of
integrated circuit that uses both bipolar and CMOS technologies to create
transistors that can handle higher current than CMOS-only transistors.
CDMA (Code Division Multiple Access) -- a digital spread-spectrum
modulation technology for radio links, used primarily with personal
communications devices such as mobile phones.
GaAs (gallium arsenide) -- an alloy of gallium and arsenic that is used as
the base material for compound (multi-element) semiconductors. It is
several times faster than silicon and is used in high-frequency,
high-speed, low-power applications such as cell phones, and is particularly
effective for manufacturing the RF front-ends of cellular/PCS handsets, the
part that broadcasts and detects the signal.
GSM (Global System for Mobile Communications) -- a set of standards for
digital transmission techniques that have been widely adopted in Europe for
mobile communications and supported in North America for Personal
Communications Service (PCS).
GPRS (General Packet Radio Service) is a wireless service for digital
cellular networks. It provides efficient, low-cost, end-to-end access to
Internet network services. GPRS uses a packet-mode technique to transfer
high-speed and low-speed data and signaling in an efficient manner over GSM
radio networks.
HBT (heterojunction bipolar transistor) -- a very high-performance
transistor structure that offers higher RF power gain per stage and does
not require a negative power supply, making it ideal for wireless
applications.
InGaP (indium gallium phosphide) HBT -- a semiconductor used to form the
emitter region of a gallium arsenide heterojunction bipolar transistor.
PHEMT (pseudomorphic high electron mobility transistor) -- a type of
compound semiconductor that features high electron mobility and low-noise
characteristics, making it suitable for high-speed devices.
SiGe (silicon germanium) -- a semiconductor material made from silicon and
germanium that is compatible with standard semiconductor fabrication
processes, and that enables transistors to switch faster and yield higher
performance than all-silicon transistors, and can be built on the same chip
with silicon transistors to create high-frequency circuits.
Transistor -- a device used to amplify a signal or open and close a
circuit. The transistor contains a semiconductor material that can change
its electrical state when pulsed.
THE FOLLOWING IS THE SCRIPT OF A TELEPHONE CONFERENCE CALL WITH ANALYSTS
AND OTHERS HELD ON DECEMBER 17, 2001
December 17, 2001
Alpha/Conexant Conference Call Script
Conference Call Coordinator
I would like to introduce Paul E. Vincent, Vice President and Chief Financial
Officer for Alpha Industries, who will chair this morning's conference
call.
Paul
Thank you. Good morning everyone and welcome to this joint conference call
with management from Alpha Industries and Conexant Systems. We are very
pleased to announce the signing of a definitive agreement that will result
in the combination of Conexant's wireless communications business with
Alpha in a stock for stock transaction. Based on Alpha's closing price as
of Friday, December 14 of $21.20, the combined company would be valued at
approximately $3 billion dollars. We anticipate completing this business
merger by the end of the second quarter of calendar 2002, subject to
customary regulatory approvals and approval by the shareholders of Alpha.
Joining me today are Dave Aldrich, President and Chief Executive Officer of
Alpha and Dwight Decker, Chairman and Chief Executive Officer of Conexant.
We will begin today's call with Dave's perspective on the strategic
significance of this business combination, followed by remarks from Dwight.
I will provide a summary of the merger agreement and a brief discussion of
the mechanics of the transaction. Dave will provide closing remarks and we
will then open the call for your questions.
Please note that our comments today will include statements relating to
future results that are forward looking statements as defined in the
Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from those projected as a result of certain risks and
uncertainties, including but not limited to those noted in our respective
earnings releases and those detailed from time to time in both companies'
SEC filings.
I will now turn the call over to Dave for his perspective on this strategic
business combination.
Dave
Thank you Paul
We at Alpha are simply delighted to be joining forces with Conexant's
wireless communications business team.
I. During this call we will provide:
o Strategic rationale for the merger
o Competitive advantages
o Some of the ways in which we intend to exploit these advantages
a) Quite simply, this business combination will create
the pure-play world leader in radio frequency (RF)
and complete semiconductor systems solutions for
mobile communications applications
b) This combination possesses the:
o Scale, manufacturing muscle, technical depth and breadth to become a
major force in the wireless industry over the long term
II. A little about Alpha
We are extremely proud of the success the Alpha team has enjoyed in the
wireless semiconductor industry over the past several years as evidenced
by:
o The market leadership positions we have established with our broad
portfolio of radio-frequency (RF) integrated circuit-based solutions
- Amplification, control, frequency conversion, filtering
o The PHEMPT, InGaP HBT and Ceramic processes we have developed to produce
high volume leadership products
o Our blue chip customer base which includes many of the leading
wireless handset and virtually all infrastructure OEMs
o Our reputation for operational excellence throughout all phases of
product design, production and customer support activities
...all of which has translated into revenues and operating income tripling
over the past four years (through FY01)
III. However, it is important to recognize that a dramatic transformation
is taking place as the wireless industry migrates towards a high-volume
consumer electronics model
o Our OEM customers are faced with compressed product life cycles and
the need to reduce costs while advancing product features
o As a result, these customers are looking to partner with suppliers who
possess not only the technical bandwidth to deliver more of the
overall solution, but also the critical mass and operational agility
to provide a low cost solution delivered on time, all the time
IV. For those of you who already know us, we place an enormous premium on
our operational efficiency (i.e., highest inventory turns in the industry)
as well as the depth and breadth of our RF semiconductor technologies.
o Conexant as you already know, has extraordinary technical breadth
spanning not only the RF portion, but also the baseband processing and
software to provide the end-to-end solution
o Combining our two highly complementary wireless businesses, both with
proven track records of product execution and revenue growth, creates
the industry's:
a) Broadest technology capability
b) Most complete product offering
c) Engagements with virtually all handset and infrastructure ODMs and OEMs
Exploiting these advantages provides the opportunity to increase
our collective share of the semiconductor content in mobile
communications applications
V. We believe this is possible in two ways --- through product portfolio
and channel leverage.
Product
A. In the RF systems arena, the combined company's leadership portfolio will
include:
o Combination switch and filter products
o Multi-chip power amplifier modules
o Highly integrated transmit-and-receive devices for all major wireless
air interface standards
B. From a complete handset systems perspective, the combined company will
deliver the world's most comprehensive 2.5G GSM/GPRS solution,
including the complete radio as well as all baseband processing,
protocol stack and user interface software.
o Plus complete reference designs and development platforms
- Goal --- Make it easy to design around our products
C. For infrastructure applications, we have the unique opportunity to
capitalize on Conexant's integrated RF product and technology
capabilities across Alpha's existing strong channel relationships and
broad customer engagements to create a high margin business
complementary to our handset thrust.
Channel
A. Together, we sell a broad portfolio of products to virtually every key
wireless OEM.
o In fact, as a result of the merger, the new company's top four handset
customers will consist of Nokia, Motorola, Sony/Ericsson and
Samsung---the world's largest handset OEMs
o The company's top four infrastructure customers will be Ericsson,
Motorola, Nokia, and Nortel --- the world's largest infrastructure
OEMs
Both business teams have gotten to know each other quite well during our
discussions and negotiations and have also gained quite a bit of insight
into each other's capabilities through interactions in the marketplace. We
share a common vision about the evolution of the wireless market. And both
teams are quite comfortable with this business combination and expect to
thrive as the combined entity continues to take share in the marketplace.
I'd now like to turn the call over to Dwight to provide his perspective on
the merits of this transaction and an overview of the continuing Conexant
businesses.
Dwight
Thank you Dave.
I am extremely pleased to have the opportunity to merge our wireless
business with a quality partner such as Alpha, one that shares a common
vision of the prerequisites for successful participation in this high
growth market opportunity.
As we have been communicating for some time now, we view mobile
communications as one of our three core investment areas. Over the past
five years we have significantly expanded our product portfolio across
multiple wireless handset air-interface-standards and established a number
of market leadership positions, resulting in a five-fold increase in
revenues, to more than $250 million dollars. With Alpha's complementary
products and outstanding track record, we strongly believe the merger will
create a company that is capable of even greater long-term success.
As Dave mentioned earlier, there are numerous benefits to be derived from
this business combination. We believe combining the wireless technology and
product portfolios of the two companies will uniquely position the new
entity to drive the evolution of RF integration for all major air
interfaces and complete semiconductor and software solutions for advanced
2.5G and 3G applications. From a product design perspective, the business
combination brings together, in total, 650 highly talented process
development, analog, mixed signal, DSP and software design engineers
located throughout 17 design centers worldwide, entirely focused on next
generation wireless solutions. Equally important, the new company's product
design teams will have access to the industry's broadest suite of advanced
manufacturing capabilities including:
o Gallium Arsenide-based PHEMPT and InGaP HBT processes...ideally
suited for RF switch and power amplifier applications
o Long-term assured access to Conexant's advanced SiGe and BICMOS wafer
manufacturing...specifically targeted for integrated RF handset and
infrastructure applications, and
o A world-class, high volume, low cost RF module assembly and test
facility... which will bring significant economies of scale to the
combined company's manufacturing requirements
Merging our wireless communications business with Alpha will create a new
independent, publicly traded company with a product portfolio, sales
channels and manufacturing capabilities unmatched in the industry...and one
that is ideally positioned to execute on the expanded mobile communications
market opportunity this combination enables.
Now turning to the continuing Conexant businesses.
As you may recall, when Conexant transitioned to an independent company
several years ago, we recognized the value of focus, and we organized our
efforts and investments around three distinct market segments---Internet
infrastructure, mobile communications, and broadband access.
In September 2000, we took the first step to structure our business around
this market-focused strategy, by announcing our plan to separate our
Internet infrastructure business...Mindspeed Technologies...into an
independent entity. Through internal development and key acquisitions within
Mindspeed, we have successfully created one of the industry's broadest
Internet Edge and Wide Area Networking product portfolios.
Leading networking OEMs including Alcatel, Cisco, Ericsson, Fujitsu,
Lucent, Nortel and Siemens, as well as emerging market leaders such as
Ciena, Huawei, Juniper and Tellium, incorporate Mindspeed solutions to
deliver new high-speed data, voice and video applications to network
service providers and enterprise customers.
And, we intend to complete Mindspeed Technologies' transition to an
independent, publicly traded company as soon as market and business
conditions permit.
Today's announcement reflects the next step in the execution of our market
focused strategy...separation of our mobile communications and broadband
access businesses into two independent, publicly traded companies.
Our continuing Broadband access business has developed a comprehensive
suite of technologies that enable digital entertainment and information
networks for the home and small office. Building on our leading market
positions in both the traditional analog dial-up communications and analog
broadcast video segments, we have established one of the industry's
strongest product and technology portfolios for key emerging broadband
access applications and media processing markets.
Key OEMs such as Dell, Gateway, Hewlett Packard, Microsoft, Motorola, Pace,
Samsung, Sony, and Thomson, to name just a few, rely on our portfolio of:
o High speed cable and DSL modems
o Satellite and fixed wireless access solutions
o Key system and software expertise for both media and protocol processing
gateways, and o Home and small office networking solutions utilizing
Ethernet, HomePNA, power line and wireless LAN technologies
Together, these products and technologies are used to connect personal
access products such as set-top boxes, residential gateways, PCs and game
consoles to video, voice and data processing services over broadband
connections.
We believe that these three planned pure-play semiconductor companies...
focused on delivering integrated solutions for the highest growth, highest
value opportunities within Internet infrastructure, mobile communications
and broadband access markets... will ultimately create the greatest value
over time for Conexant shareowners, employees and customers.
I'd now like to turn the call over to Paul for his comments.
Paul
Thank you Dwight.
I would like to briefly discuss a few highlights of the merger agreement.
The business combination will be executed as a stock for stock transaction
utilizing the purchase method of accounting.
o Shareholders of Alpha will receive one share and each Conexant shareowner
will receive .342 of a share in the new company.
o Upon the close, the new company would have approximately 140 million
shares outstanding, on a fully diluted basis, with Alpha shareholders
owning approximately one-third of the new company and Conexant
shareholders owning approximately two-thirds of the new company.
Based on Alpha's closing price as of Friday, December 14 of $21.20, the
combined company's market capitalization would be valued at approximately
$3 billion dollars.
The business combination will take the form of a two-step transaction.
o Conexant will spin-off its Wireless Communications business, including
its Gallium Arsenide wafer fabrication facility located in Newbury
Park, California, to its shareowners in a tax-free distribution, to be
immediately followed by the merger of that business with Alpha.
o Upon completion of the merger, the new company will purchase
Conexant's semiconductor assembly, module manufacturing and test
facility, located in Mexicali, Mexico for $150 million dollars in
cash.
The boards of directors of both companies have unanimously approved the
definitive agreements for this transaction.
From a timing perspective, we expect the merger to be successfully
completed by the end of the second quarter of calendar 2002, after receipt
of:
o Customary regulatory approvals
o A ruling from the IRS that the distribution of Conexant's Wireless
Communications business to Conexant shareholders qualifies as a tax-free
distribution, and
o Alpha shareholder approval
The merged company will operate under a new name and stock ticker symbol
that will be announced during the next few months.
We expect, after completion of the transaction, that the revenue run rate
for the combined businesses in the third calendar quarter of 2002 will be
approximately $600 million dollars. At this revenue level, we expect the
transaction to be accretive. As we get closer to the completion of the
merger, we will provide a financial outlook for the combined business, on a
pro forma operating basis.
I would now like to turn the call back over to Dave for his closing
comments.
Dave
Thank you Paul.
As you have heard from everyone this morning, we strongly agree on the
strategic benefits of this business combination and we look forward to the
future with a sense of excitement and confidence.
Excitement in terms of:
1. The significantly expanded market opportunities that we can address
through a much broader product and technology portfolio---very little
overlap; almost entirely a complimentary product/technology portfolio
2. The fact that we now engage with virtually every significant OEM in the
wireless market
3. We have the critical mass to create/maintain competitive position as a
low cost producer
4. Our product development engine is strengthened --- 650 engineers
In fact, we fully expect the combined business to generate substantial
revenue growth in the coming years well in excess of the overall market as
a result of share gains and an increasing level of higher value,
systems-level business.
That wraps up our prepared comments. Operator, let's open the lines for the
question and answer session.
Conference Call Coordinator
Ladies and gentlemen, should you have questions and comments...
Dave
Thank you
That concludes our conference call today. On behalf of the Alpha and
Conexant management teams, thank you for your participation this morning.