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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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YURIE SYSTEMS, INC.
(NAME OF SUBJECT COMPANY)
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YURIE SYSTEMS, INC.
(NAME OF PERSON FILING STATEMENT)
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COMMON STOCK, $.01 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
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98871Q102
(CUSIP NUMBER OF CLASS OF SECURITIES)
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JOHN J. MCDONNELL, ESQ.
SECRETARY AND GENERAL COUNSEL
YURIE SYSTEMS, INC.
8301 PROFESSIONAL PLACE
LANDOVER, MD 20785
(301) 352-4600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT)
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Copies to:
RICHARD A. STEINWURTZEL, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
1001 PENNSYLVANIA AVENUE, N.W., SUITE 800
WASHINGTON, D.C. 20004-2505
(202) 639-7120
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INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 (this
"Schedule 14D-9") relates to an offer by Reindeer Acquisition, Inc., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Lucent
Technologies Inc., a Delaware corporation ("Parent"), to purchase all of the
Shares (as defined below) of Yurie Systems, Inc., a Delaware corporation (the
"Company").
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Yurie Systems, Inc. The address of the
principal executive office of the Company is 8301 Professional Place, Landover,
Maryland 20785. The title of the class of equity securities to which this
Schedule 14D-9 relates is the common stock of the Company, par value $.01 per
share (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Schedule 14D-9 relates to the tender offer (the "Offer") disclosed in
the Tender Offer Statement on Schedule 14D-1/Schedule 13D dated April 30, 1998
(as amended or supplemented, the "Schedule 14D-1") filed with the Securities and
Exchange Commission (the "Commission") by Parent and the Purchaser, relating to
an offer by the Purchaser to purchase all outstanding Shares at a price of $35
per Share, net to the seller in cash, without interest thereon (the "Offer
Price"), upon the terms and subject to the conditions set forth in the Offer to
Purchase dated April 30, 1998, a copy of which is filed as Exhibit (a)(1) hereto
(the "Offer to Purchase"), and the related Letter of Transmittal, a copy of
which is filed as Exhibit (a)(2) hereto. The principal executive offices of each
of Parent and the Purchaser are located at 600 Mountain Avenue, Murray Hill, New
Jersey 07974.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of April 27, 1998 (the "Merger Agreement") among the Company, Parent and the
Purchaser. A copy of the Merger Agreement is filed as Exhibit (c)(1) to Parent's
Schedule 14D-1 and is hereby incorporated by reference. The Merger Agreement
provides that, among other things, as soon as practicable after the purchase of
Shares pursuant to the Offer and the satisfaction of the other conditions set
forth in the Merger Agreement and in accordance with the relevant provisions of
the General Corporation Law of the State of Delaware ("Delaware Law" or the
"DGCL"), the Purchaser will be merged with the Company (the "Merger"). Following
consummation of the Merger, the Company will continue as the surviving
corporation (the "Surviving Corporation") and will become a wholly owned
subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), each Share issued and outstanding immediately prior to the Effective
Time (other than Shares held by the Company or any subsidiary of the Company, or
owned by the Purchaser, Parent or any other subsidiary of Parent or held by
stockholders who shall have demanded and perfected appraisal rights, if any,
under Delaware Law) will be canceled and converted automatically into the right
to receive the price per Share paid pursuant to the Offer in cash, without
interest (the "Merger Consideration"). The Merger Agreement is summarized in
Section 12 of the Offer to Purchase.
Parent and the Purchaser entered into a Stockholders Agreement dated as of
April 27, 1998 (the "Stockholders Agreement") with certain principal
stockholders of the Company (the "Stockholders"), pursuant to which each
Stockholder has agreed to tender into the Offer all the Shares that such
Stockholder owns. These Shares represent more than a majority of the outstanding
Shares (determined on a fully diluted basis) and, upon the tendering of these
Shares, the Minimum Condition (as defined in the Offer to Purchase) will be
satisfied. As of April 24, 1998, there were 17,766,200 Shares subject to the
Stockholders Agreement, representing approximately 57% of the outstanding Shares
on a fully diluted basis. Once the Minimum Condition is satisfied and the
Purchaser accepts for payment Shares tendered pursuant to the Offer, the
Purchaser will be able to elect a majority of the members of the Company's Board
of Directors and to effect the Merger without the affirmative vote of any other
stockholder of the Company.
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ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Schedule 14D-9, are set forth in Item 1 above. Unless the context
otherwise requires, references to the Company in this Schedule 14D-9 are to the
Company and its subsidiaries, viewed as a single entity.
(b) Certain contracts, agreements, arrangements or understandings known to
the Company between the Company or its affiliates and (i) certain of the
Company's executive officers, directors or affiliates or (ii) certain of
Parent's executive officers, directors or affiliates will be described in the
Information Statement of the Company to be filed with the Commission (the
"Information Statement"). Other such contracts, arrangements and understandings
known to the Company are summarized in Section 12 of the Offer to Purchase and
are incorporated herein by reference. The Information Statement will be
furnished to the Company's stockholders pursuant to Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
issued under the Exchange Act in connection with the Purchaser's right (after
consummation of the Offer) to designate persons to be appointed to the Board of
Directors of the Company other than at a meeting of the stockholders of the
Company. The Information Statement,when filed with the Commission as an
amendment to this Schedule 14D-9, will be incorporated by reference herein.
The information contained under the caption "Purpose of the Offer; The
Merger Agreement; The Stockholders Agreement" in Section 12 of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has unanimously approved the Offer,
the Merger, the Merger Agreement and the Stockholders Agreement and the
transactions contemplated thereby and determined that the Offer and the Merger,
taken together, are fair to and in the best interests of the Company and its
stockholders. The Board of Directors unanimously recommends that stockholders
accept the Offer and tender their Shares to the Purchaser, and approval and
adoption of the Merger Agreement and the Merger by the stockholders of the
Company. This recommendation is based in part upon an opinion of BT Alex. Brown
Incorporated ("BT Alex. Brown") that the consideration to be received by the
Company's stockholders in the Offer and the Merger is fair to the stockholders
from a financial point of view (the "Fairness Opinion"). The Fairness Opinion
contains a description of the factors considered, the assumptions made, and the
scope of the review undertaken by BT Alex. Brown in rendering its opinion. The
full text of the opinion of BT Alex. Brown is attached hereto as Annex A to this
Schedule 14D-9 and is incorporated herein by reference. Stockholders are urged
to read such opinion of BT Alex. Brown in its entirety.
As set forth in the Merger Agreement, the Purchaser will purchase Shares
tendered prior to the close of the Offer if the conditions to the Offer have
been satisfied (or waived). Stockholders of the Company that beneficially own
approximately 57% of the Shares on a fully diluted basis have agreed with Parent
in the Stockholders Agreement to tender their Shares in the Offer, thereby
assuring that the Minimum Condition will be satisfied. Once the Minimum
Condition is satisfied and Purchaser accepts for payment Shares tendered
pursuant to the Offer, Purchaser will be able to elect a majority of the members
of the Company's Board of Directors and to effect the Merger without the
affirmative vote of any other stockholder of the Company.
Under Delaware Law, the approval of the Board and the affirmative vote of
the holders of a majority of the outstanding Shares (unless at least 90% of the
outstanding Shares are held by the Purchaser) are required to approve the
Merger. Accordingly, if the conditions to the Offer are satisfied, the Purchaser
will have sufficient voting power to cause the approval of the Merger without
the affirmative vote of any other stockholder. Under Delaware Law, if the
Purchaser acquires, pursuant to the Offer or otherwise, at least 90% of the then
outstanding Shares, the Purchaser will be able to approve and adopt the Merger
Agreement and the Merger, without a vote of the Company's stockholders. Parent,
the Purchaser and the Company have agreed to use their reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Offer, the Merger and the
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other transactions contemplated by the Merger Agreement and the Stockholders
Agreement. If the Purchaser does not acquire at least 90% of the then
outstanding Shares pursuant to the Offer or otherwise and a vote of the
Company's stockholders is required under Delaware Law, a longer period of time
will be required to effect the Merger.
The Offer is scheduled to expire at 12:00 Midnight, New York City time, on
May 28, 1998, unless the Purchaser extends the period of time for which the
Offer is open. Unless at the scheduled expiration date of the Offer any of the
conditions to the Offer shall not be satisfied or waived, or an extension of the
Offer shall be required by any rule, regulation, interpretation or position of
the Commission or the staff thereof applicable to the Offer or any applicable
law, the Purchaser may not extend the Offer by more than 10 business days beyond
the latest expiration date otherwise permitted pursuant to the preceding part of
this sentence, and the Purchaser may make such extension only if at the
scheduled expiration date of the Offer there shall not have been tendered at
least 90% of the outstanding Shares. A copy of the press release issued by
Parent on April 27, 1998 announcing the Merger and the Offer is filed as Exhibit
(a)(8) to Parent's Schedule 14D-1 and is incorporated herein by reference in its
entirety.
(b) BACKGROUND OF THE OFFER; REASONS FOR THE RECOMMENDATION.
BACKGROUND OF THE OFFER.
In August 1997, the Company and Parent entered into a private-label
agreement (the "OEM Agreement"), under which the Company granted Parent the
non-exclusive right to resell the Company's ATM access products under Parent's
brand name for a period of three years. The Company's sales to Parent pursuant
to the OEM Agreement were approximately $1.8 million, or 3.5% of the Company's
total revenue, for fiscal 1997, and approximately $1.7 million, or 9.1% of the
Company's total revenue, for the quarter ended March 31, 1998.
During January, February and March 1998, the Company discussed with BT
Alex. Brown strategic alternatives available to the Company, including potential
acquisitions by the Company, as well as potential partners or acquirors of the
Company. During this time, the Company engaged BT Alex. Brown to initiate
discussions with various companies which, in the view of BT Alex. Brown and
management, could have had a potential interest in a strategic relationship with
the Company. BT Alex. Brown contacted these companies to inquire whether they
were interested in discussing a strategic relationship. None of the companies
contacted expressed an interest in pursuing a strategic or other relationship
with the Company, including any potential interest in acquiring the Company.
On February 20, 1998, the Company's President and Chief Operating Officer,
Harry J. Carr, met with the President of Parent's Data Networking Systems
business unit, William T. O'Shea, to discuss possibilities for broadening their
business relationship under the OEM Agreement.
On March 23, 1998, Mr. O'Shea called Mr. Carr to express Parent's interest
in broadening its relationship with the Company, up to and including the
possibility of an equity investment, and proposed a meeting to discuss all
possibilities. On March 31, 1998, Mr. O'Shea met with Mr. Carr and expressed
Parent's interest in pursuing an acquisition. He suggested that they schedule
additional meetings to obtain additional information about the Company and
discuss its strategic plans.
On April 2, 1998, Parent and the Company entered into a confidentiality
agreement to govern the exchange of nonpublic information between them.
On April 4, the Company's Board of Directors met to consider whether
management should pursue discussions with Parent regarding the sale of the
Company. The Board of Directors authorized management and the Company's advisors
to hold discussions with Parent regarding a possible transaction. At this
meeting, BT Alex. Brown reported to the Board of Directors regarding its
contacts with other potential strategic partners/acquirors.
On April 9, 1998, representatives of Parent and of the Company met to
initiate the exchange of information and to discuss overall approaches to an
acquisition.
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On April 17, 1998, representatives of Parent called Mr. Carr to inform him
that Parent was prepared to make an offer to the Company in connection with a
proposed transaction.
On April 20, 1998, representatives of Parent met again with representatives
of the Company to discuss various proposed acquisition structures. Negotiations
with respect to structure, price, the form of consideration and other material
terms continued through the day. Following extensive negotiations, on April 21,
1998, Parent agreed to increase its offer from consideration valued at $34 per
Share to $35 per Share in cash, subject to completion of due diligence,
agreement on post-acquisition organizational structure, negotiation of a
satisfactory Merger Agreement and other conditions.
On April 21, 1998, the Board of Directors of the Company, at a regularly
scheduled Board meeting, discussed Parent's offer and the status of discussions.
At that meeting, BT Alex. Brown expressed its preliminary view with respect to
the fairness to stockholders from a financial point of view of the $35 per Share
cash price. The Board instructed management and the Company's advisors to
continue to negotiate the terms of a merger agreement with Parent.
From April 22, 1998, through April 24, 1998, Parent conducted additional
due diligence. In addition, during this time period, additional negotiations
occurred concerning the terms of the Merger Agreement and the other agreements
contemplated thereby.
On the afternoon of April 24, 1998, the Board of Directors of the Company
met again to consider Parent's offer, to review the current terms of the Merger
Agreement and the other agreements contemplated thereby and to consider open
issues. BT Alex. Brown orally reported that, upon completion of the
negotiations, it expected to be able to advise the Board that the proposed price
of $35 per Share in cash was fair to the Company's stockholders from a financial
point of view. Negotiations on the Merger Agreement and related documents
continued through the morning of April 26.
On April 26, 1998, the Board of Directors of the Company met to consider
the final terms of the transaction. After a review and discussion of the terms
of Parent's proposal, BT Alex. Brown made a presentation to the Board with
respect to the Offer and the Merger and stated that BT Alex. Brown was of the
opinion that the $35 per Share cash price to be paid in the Offer and the Merger
was fair to the stockholders of the Company from a financial point of view.
After further discussion, the Board of Directors approved the Offer, the Merger,
the Merger Agreement and the Stockholders Agreement.
On the morning of April 27, 1998, the Board of Directors of Parent approved
the transaction, after which the Merger Agreement, the Stockholders Agreement
and the employee retention agreements were executed and delivered and the
transaction was publicly announced.
REASONS FOR THE RECOMMENDATION.
In reaching its determination described above, the Board of Directors of
the Company considered a number of factors, including, without limitation, the
following:
(i) the amount of consideration to be received by the Company's
shareholders in the Offer and the Merger, as well as the fact that
shareholders would receive a cash payment with no financing condition;
(ii) the Company's prospects if it were to remain independent,
including the risks inherent in remaining independent, and the prospects of
the Company going forward as an independent company;
(iii) the possible alternatives to the Offer and the Merger (including
the possibility of continuing to operate the Company as an independent
entity), the range of possible benefits to the Company's stockholders of
such alternatives and the timing and the likelihood of accomplishing the
goal of any of such alternatives;
(iv) the current status of the ATM access market and the competitive
advantage in the industry of large telecommunications companies, including
Parent, with significant distribution capacity, installed infrastructure,
compatible product and service offerings, and substantial financial
resources;
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(v) the current industry trend toward sector consolidation, and
management's belief that the Company's core ATM access market will be
controlled by large network equipment vendors in the near future, which are
likely either to acquire the Company's competitors or to develop their own
competitive technologies, and the assumption that this development would be
extremely detrimental to the Company, due to its reliance on these
companies as important distribution channel partners. In particular, the
Board considered that, given the importance of this market to Parent, it
was likely that, if the acquisition did not occur, Parent would acquire a
major competitor of the Company in the future;
(vi) the financial condition, historical results of operations and
business and strategic objectives of the Company, as well as the risks
involved in achieving those objectives;
(vii) other historical information concerning the Company's business,
prospects, financial performance and condition, operations, technology,
management and competitive position;
(viii) the fact that the $35 per Share to be paid in the Offer and as
the consideration in the Merger represents: a premium of approximately
52.9% over the 90-day trailing average of $22.89 per Share and a premium of
approximately 37.1% over the 30-day trailing average of $25.53 per Share; a
premium of approximately 47.4% over the $23.75 closing sale price for the
Shares on the Nasdaq National Market one month prior, on March 27, 1998; a
premium of approximately 13.8% over the $30.75 closing sale price for the
Shares on the Nasdaq National Market one week prior, on April 17, 1998; and
a premium of approximately 11.1% over the $31.50 closing sale price for the
Shares on the Nasdaq National Market on April 24, 1998, the last trading
day prior to the public announcement of the execution of the Merger
Agreement;
(ix) current financial market conditions, and historical market
prices, volatility and trading information with respect to the Common Stock
of the Company;
(x) that, in view of the prior efforts of the Company and BT Alex.
Brown to find strategic partners and potential acquirors, it was highly
unlikely that any other party would propose to enter into a more favorable
transaction to the Company and its stockholders;
(xi) the financial presentation of BT Alex. Brown made on April 26,
1998, the oral opinion of BT Alex. Brown delivered to the Board at the
April 26, 1998 Board meeting, and the written opinion of BT Alex. Brown
dated April 27, 1998, to the effect that, as of such date and based upon
and subject to certain matters stated in such opinion, the cash
consideration of $35 per Share to be received by holders of Shares (other
than Parent and its affiliates) in the Offer and the Merger was fair, from
a financial point of view, to such holders. The full text of the written
opinion of BT Alex. Brown, dated April 27, 1998, which sets forth
assumptions made, matters considered and limitations on the review
undertaken in connection with the opinion, is attached hereto as Annex A,
and stockholders are urged to read such opinion of BT Alex. Brown in its
entirety;
(xii) the financial analysis of BT Alex. Brown which, among other
things, compared various financial multiples and premia of the Offer to
similar financial criteria for selected publicly traded companies and
selected precedent transactions and concluded that such financial criteria
of the Offer were generally above the mean and in several cases above the
maximum of the range as compared to the selected publicly traded companies
and selected precedent transactions; in addition BT Alex. Brown compared
the value of the Offer to a discounted cash flow analysis, which indicated
that the value of the Offer was at the high end of the range of the
discounted cash flow analysis;
(xiii) the high likelihood that the proposed acquisition would be
consummated, in light of the experience, reputation and financial
capabilities of Parent, and that the proposed acquisition would be
consummated more quickly than a stock-for-stock merger and, on the other
hand, the risks to the Company if the acquisition were not consummated or
were not consummated for a significant period of time, including a
potential negative effect on (a) the Company's sales and operating results,
(b) progress of certain development projects and (c) the Company's stock
price; and
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(xiv) the terms of the Merger Agreement, including the parties'
representations, warranties and covenants, and the conditions to their
respective obligations, including the significant economic protection to
the Company if the transaction is not consummated for reasons other than a
breach or default by the Company.
The Board did not assign relative weights to the above factors or determine
that any factor was of particular importance. Rather, the Board viewed its
position and recommendations as being based on the totality of the information
presented to and considered by it. In addition, it is possible that different
members of the Board assigned different weights to the various factors described
above.
The Board recognized that, while the consummation of the Offer gives the
Company's shareholders the opportunity to realize a premium over the price at
which the Shares were traded during the period prior to the public announcement
of the Offer, tendering in the Offer would eliminate the opportunity for such
shareholders to participate in the future growth and profits of the Company. The
Board believes that the loss of this opportunity was fully reflected in the
Offer price of $35 per Share. The Board recognized that there can be no
assurance as to the level of growth or profits to be attained by Company, if it
remained independent, or by the Surviving Corporation in the future.
It is expected that, if the Shares were not purchased by Parent in
accordance with the terms of the Offer or if the Merger is not consummated, the
Company's current management, under the general direction of the Board, will
continue to manage the Company as an ongoing business.
THE FULL TEXT OF THE WRITTEN FAIRNESS OPINION OF BT ALEX. BROWN IS FILED AS
EXHIBIT (a)(4) TO THIS SCHEDULE 14D-9 AND IS ALSO ATTACHED HERETO AS ANNEX
A. STOCKHOLDERS ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS
ENTIRETY. SUCH OPINION WAS PRESENTED FOR THE INFORMATION OF THE BOARD IN
CONNECTION WITH THEIR CONSIDERATION OF THE MERGER AGREEMENT AND IS DIRECTED
ONLY TO THE FAIRNESS (FROM A FINANCIAL POINT OF VIEW) OF THE CONSIDERATION
TO BE RECEIVED BY HOLDERS OF SHARES (OTHER THAN PARENT AND ITS AFFILIATES)
PURSUANT TO THE OFFER AND THE MERGER. SUCH OPINION DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER SHARES IN THE
OFFER OR TO VOTE WITH RESPECT TO THE MERGER.
IN LIGHT OF THE FACTORS SET FORTH ABOVE, THE BOARD RESOLVED UNANIMOUSLY TO
APPROVE THE OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER
AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY AND RESOLVED UNANIMOUSLY TO RECOMMEND THAT STOCKHOLDERS OF
THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES TO THE PURCHASER.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company retained BT Alex. Brown to provide financial advisory services
in connection with a possible business transaction for the Company. Pursuant to
a letter agreement dated February 20, 1998, as amended on March 6, 1998, between
the Company and BT Alex. Brown, the Company, as compensation for such services,
has agreed to pay BT Alex. Brown, upon any "sale of the Company" (defined as one
or a series of related transactions, including, but not limited to, transactions
of the type contemplated by the Merger Agreement), a transaction fee equal to
.58% of the aggregate consideration received by the stockholders of the Company
in the Offer and the Merger. The Company has agreed to reimburse BT Alex. Brown
for its reasonable out-of-pocket expenses incurred in connection with rendering
financial advisory services, including fees and disbursements of its legal
counsel. The Company has also agreed to indemnify BT Alex. Brown and its
directors, officers, agents, employees and controlling persons for certain
costs, expenses and liabilities, including certain liabilities under the federal
securities laws.
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Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the stockholders of the Company on its
behalf with respect to the Offer, except that such solicitations or
recommendations may be made by directors, officers or employees of the Company,
for which services no additional compensation will be paid.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) During the past 60 days, no transactions in Shares have been effected
by the Company or, to the Company's knowledge, by any of its executive officers,
directors, affiliates or subsidiaries, except as follows:
1. The Company has granted stock options to, and sold stock upon
exercise of stock options held by, employees and consultants under its
stock plans.
2. James Woolsey sold 24,000 Shares on March 20, 1998.
3. Kwok Li sold 125,000 Shares on March 20, 1998 and 175,000 Shares on
March 23, 1998.
4. The Company purchased 13,512 shares in connection with cashless
exercises of employee options over the past 60 days.
(b) To the Company's knowledge, all of the Company's executive officers and
directors who own Shares currently intend to tender all of their Shares (other
than Shares, if any, held by such person that, if tendered, could cause such
person to incur liability under the provisions of Section 16(b) of the Exchange
Act) pursuant to the Offer. Certain executive officers, directors and
shareholders entered into the Stockholders Agreement with Parent and the
Purchaser to tender their Shares in connection with the execution of the Merger
Agreement. These persons beneficially own approximately 57% (on a fully diluted
basis) of the Shares of the Company.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth herein, no negotiation is being undertaken or is
underway by the Company in response to the Offer that relates to or would result
in (i) an extraordinary transaction, such as a merger or reorganization
involving the Company or any subsidiary thereof; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary
thereof; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as set forth herein, there is no transaction, board resolution,
agreement in principle or signed contract in response to the Offer that relates
to or would result in one or more of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Not Applicable
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase dated April 30, 1998 (incorporated by
reference to Exhibit (a)(1) to Parent and the Purchaser's
Tender Offer Statement on Schedule 14D-1 dated April 30,
1998, as amended (the "Schedule 14D-1")).
(a)(2) Letter of Transmittal (incorporated by reference to Exhibit
(a)(2) to the Schedule 14D-1).
(a)(3) Press release issued by Parent on April 27, 1998
(incorporated by reference to Exhibit (a)(8) to the Schedule
14D-1).
(a)(4)(1) Opinion of BT Alex. Brown Incorporated dated April 27,
1998.*
(a)(5) Letter to Stockholders dated April 30, 1998 from Jeong H.
Kim, Chairman of the Board of Directors and Chief Executive
Officer of the Company.*
(c)(1) Agreement and Plan of Merger, dated as of April 27, 1998,
among Parent, the Purchaser and the Company (incorporated by
reference to Exhibit (c)(1) to the Schedule 14D-1).
(c)(2) Stockholders Agreement, dated as of April 27, 1998, among
the Purchaser, Parent and certain principal stockholders of
the Company (incorporated by reference to Exhibit (c)(2) to
the Schedule 14D-1).
(c)(3) Retention Agreement, dated April 27, 1998, among Parent,
Purchaser, the Company, The Bank of New York and Jeong H.
Kim (incorporated by reference to Exhibit (c)(3) to the
Schedule 14D-1).
(c)(4) Retention Agreement, dated April 27, 1998, among Parent,
Purchaser, the Company, The Bank of New York and Kwok L. Li
(incorporated by reference to Exhibit (c)(4) to the Schedule
14D-1).
(c)(5) Retention Agreement, dated April 27, 1998, among Parent,
Purchaser, the Company and Harry J. Carr (incorporated by
reference to Exhibit (c)(5) to the Schedule 14D-9).
(c)(6) Retention Agreement, dated April 27, 1998, among Parent,
Purchaser, the Company and Barton Y. Shigemura (incorporated
by reference to Exhibit (c)(6) to the Schedule 14D-9).
(c)(7)(2) Certificate of Incorporation of the Company.
(c)(8)(3) Amended and Restated Bylaws of the Company.
</TABLE>
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* Included in copies mailed to stockholders.
(1) Attached hereto as Annex A.
(2) Incorporated by reference to an exhibit of the Registration Statement on
Form S-1 (Registration No. 333-15759), filed on November 7, 1996, as
amended.
(3) Incorporated by reference to an exhibit of the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
accurate.
YURIE SYSTEMS, INC.
By: /s/ HARRY J. CARR
------------------------------------
Harry J. Carr
President and Chief Operating
Officer
Dated: April 30, 1998
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ANNEX A
[BT Alex. Brown Incorporated Letterhead]
April 27, 1998
Yurie Systems, Inc.
8301 Professional Place
Landover, Maryland 20785
Dear Sirs:
Yurie Systems, Inc. (the "Company"), Lucent Technologies Inc. ("Parent")
and Reindeer Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Sub"), have entered into the Agreement and Plan of Merger
dated as of April 27, 1998 (the "Agreement"). Pursuant to the Agreement, Parent
proposes to cause Sub to make a tender offer (the "Offer") to purchase all the
outstanding shares of common stock, par value $.01 per share, of the Company at
a purchase price of $35.00 per share, net to the seller in cash (the "Cash
Consideration"). Thereafter, Sub shall be merged with and into the Company and
the Company shall continue as the surviving corporation as a subsidiary of
Parent (the "Merger"). In the Merger, shareholders of the Company will receive
the Cash Consideration. You have requested our opinion as to whether the Cash
Consideration is fair, from a financial point of view, to the Company's
stockholders.
BT Alex. Brown Incorporated ("BT Alex. Brown"), as a customary part of its
investment banking business, is engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for estate, corporate and other
purposes. We have acted as financial advisor to the Board of Directors of the
Company in connection with the transaction described above and will receive a
fee for our services, a portion of which is contingent upon the consummation of
the Offer. We have also served as the lead-managing underwriter in the Company's
February 5, 1997 initial public offering. BT Alex. Brown maintains a market in
the common stock of the Company and regularly publishes research reports
regarding the technology industry and the businesses and securities of the
Company, Parent and other publicly owned companies in the technology industry.
In the ordinary course of business, BT Alex. Brown may actively trade the
securities of both the Company and the Parent for our own account and the
account of our customers and, accordingly, may at any time hold a long or short
position in securities of the Company and the Parent.
In connection with this opinion, we have reviewed certain publicly
available financial information and other information concerning the Company and
Parent and certain internal analyses and other information furnished to us by
the Company. We have also held discussions with the members of the senior
management of the Company regarding the business and prospects of the Company.
In addition, we have (i) reviewed the reported prices and trading activity for
the common stock of the Company, (ii) compared certain financial and stock
market information for the Company with similar information for certain other
companies whose securities are publicly traded, (iii) reviewed the financial
terms of certain recent business combinations which we deemed comparable in
whole or in part, (iv) reviewed the terms of the Agreement and certain related
documents, and (v) performed such other studies and analyses and considered such
other factors as we deemed appropriate.
We have not independently verified the information described above and for
purposes of this opinion have assumed the accuracy, completeness and fairness
thereof. With respect to the information relating to the prospects of the
Company, we have assumed that such information reflects the best currently
available judgments and estimates of the management of the Company as to the
likely future financial performance of the Company. In addition, we have not
made an independent evaluation or appraisal of the assets of the Company and
Parent, nor have we been furnished with any such evaluations or appraisals. Our
opinion is based on market, economic and other conditions as they exist and can
be evaluated as of the date of this letter.
Our advisory services and the opinion expressed herein were prepared for
the use of the Board of Directors of the Company and do not constitute a
recommendation to the Company's stockholders as to
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whether they should tender their shares in the Offer. In addition, while we have
reviewed certain agreements entered into by Parent and principal shareholders of
the Company, we are not expressing an opinion regarding the fairness of these
agreements to such principal shareholders. We hereby consent, however, to the
inclusion of this opinion as an exhibit to the solicitation/recommendation
statement and the proxy statement distributed in connection with the Offer and
the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date of this letter, the Cash Consideration is fair, from a financial point of
view, to the Company's stockholders.
Very truly yours,
BT ALEX. BROWN INCORPORATED
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EXHIBIT (a)(5)
YURIE SYSTEMS, INC. LOGO
April 30, 1998
TO THE STOCKHOLDERS OF YURIE SYSTEMS, INC.
Dear Stockholder:
I am pleased to report that on April 27, 1998, Yurie Systems, Inc.
("Yurie") entered into a merger agreement with Lucent Technologies Inc., a
Delaware corporation ("Lucent"), and its wholly owned subsidiary, Reindeer
Acquisition, Inc., a Delaware corporation ("Purchaser"), that provides for the
acquisition of all of the common stock, par value $.01 per share (the "Shares"),
of Yurie by Purchaser at a price of $35 per Share in cash, net to the seller,
without interest. Under the terms of the proposed transaction, Purchaser has
commenced a tender offer (the "Tender Offer") for all outstanding shares of
Yurie Common Stock at $35 per Share. The Tender Offer is currently scheduled to
expire at 12:00 Midnight, New York City time, on May 28, 1998.
Following the successful completion of the Tender Offer, upon approval by
stockholder vote, if required, Purchaser will be merged with and into Yurie (the
"Merger"), and all Shares not purchased in the Tender Offer will be converted
into the right to receive $35 per Share in cash, net to the seller, without
interest.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE TENDER OFFER AND
DETERMINED THAT THE TERMS OF THE TENDER OFFER AND THE MERGER ARE FAIR TO, AND IN
THE BEST INTERESTS OF, YURIE STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT ALL YURIE STOCKHOLDERS ACCEPT THE TENDER OFFER AND
TENDER THEIR SHARES.
On April 27, 1998, Parent and Purchaser also entered into a Stockholders
Agreement with certain principal stockholders of the Company (the
"Stockholders"), pursuant to which each Stockholder has agreed to tender into
the Tender Offer all the Shares that such Stockholder owns. These Shares
represent approximately 57% of the outstanding Shares on a fully diluted basis
and, upon the tendering of these Shares, the minimum tender condition of the
Tender Offer will be satisfied. Once the minimum tender condition is satisfied
and Purchaser accepts for payment Shares tendered pursuant to the Tender Offer,
Purchaser will be able to elect a majority of the members of the Company's Board
of Directors and to effect the Merger without the affirmative vote of any other
stockholder of the Company.
The recommendation of the Board of Directors is described in the
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
filed by Yurie with the Securities and Exchange Commission and enclosed with
this letter. In arriving at its recommendation, the Board of Directors gave
careful consideration to a number of factors. These factors included the opinion
of BT Alex. Brown Incorporated, financial advisor to Yurie, a copy of which is
attached as an annex to the Schedule 14D-9. We urge you to read carefully the
Schedule 14D-9 in its entirety so that you will be more informed as to the
Board's recommendation.
A copy of the Offer to Purchase and related materials, including a Letter
of Transmittal for use in tendering Shares, accompanies this letter. These
documents set forth the terms and conditions of the Tender Offer and provide
instructions as to how to tender your Shares. We urge you to read each of the
enclosed materials carefully.
The management and the Board of Directors of Yurie thank you for the
support you have given the Company.
Sincerely,
/S/ Jeong H. Kim
Jeong H. Kim
Chairman and Chief Executive Officer
