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Filed by Adaptive Broadband Corporation
Pursuant to Rule 425 under the Securities Act of 1933 and
Deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934
Subject Company: Adaptive Broadband Corporation
Registration No. 333-51142
December 19, 2000
This filing amends certain information contained in the document filed with the
SEC pursuant to Rule 425 by Adaptive Broadband Corporation on December 11, 2000.
*********
A Conversation with Dan Scharre, President and Chief Operating Officer of
Adaptive Broadband, about the Adaptive Broadband / Western Multiplex Merger*
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Adaptive Broadband President and COO Dan Scharre recently spoke about the
proposed merger of Adaptive Broadband and Western Multiplex, which was announced
on November 13. In the conversation, Mr. Scharre -- who is slated to become the
combined company's President and COO following completion of the merger --
focused on merger-related topics of particular interest to Adaptive Broadband's
shareholders. The following is an edited transcript of the conversation.
Dan, what are some of the key reasons why you believe this deal is good for
Adaptive Broadband shareholders?
For one thing, we'll be in a much better position to respond to our
customers' requests for an integrated wireless broadband system, one that
includes both point-to-point products, in which Western Multiplex excels, and
also point-to-multipoint products, in which we're a leader. This is where the
marketplace is going and that's where we need to be.
The merger also will provide us with a large number of new sales channels.
Western Multiplex has historically focused on selling their products to VARs --
value-added resellers. They have 120 VAR customers today, who provide hundreds
or thousands of "feet on the street," so to speak, so that Western Multiplex
itself doesn't have to sell individually to each and every service provider.
By contrast, while we've targeted VARs as an important new customer
segment, Adaptive Broadband currently has only one VAR relationship. So on day
one following the merger, we will multiply the number of resellers we have by a
factor of 120!
How do you currently sell your product?
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We sell directly to customers, with about a dozen direct sales people.
Western Multiplex also has a direct sales force, which is even larger than ours.
So following the merger, the combined company will have a lot of direct sales
horsepower.
What's another key reason why Adaptive Broadband shareholders should like
this deal?
In addition to bringing new VAR relationships and new direct sales people,
Western Multiplex also brings a whole new market segment for us to sell our
products into.
Right now, we sell our products to ISPs (Internet Service Providers), and
to CLECs --Competitive Local Exchange Carriers. They, in turn, sell Internet or
data services to end customers.
Western Multiplex also sells its point-to-point products to the enterprise
and campus market segment -- large corporations, business parks, and
universities, for instance -- which have small private networks that are perfect
for our point-to-multipoint products. The enterprise/campus market is an
opportunity that we at Adaptive Broadband have identified but not yet addressed.
So again, on day one following the merger, we'll not only have a large group of
additional VARs and sales people, but a whole new enterprise/campus customer set
that we can sell to.
Couldn't you simply sell to those enterprises and campuses yourselves? Why
does it make sense to team up with Western Multiplex to help you do it?
Because of the time and expense of doing so on our own. Given the limited
size of our sales force today, there's only so much we can do. Of course, we
could build up the sales force to address the enterprise/campus market, but that
would take a lot of time and money -- and would take away resources from
building up the sales force for our very important Last Mile Access market
segment of the ISPs and the CLECs.
From what you're saying, it sounds like time-to-market is critical.
Absolutely. Given enough money, time and resources, we could do anything.
But particularly in telecommunications and high-tech, getting to market today
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enables you to be the market leader, to be successful. To stand still, or even
just be a little slow in responding to change, is not an option in this
industry.
It sounds like what you've got is a window of opportunity. Just how big is
that opportunity?
Like all the markets we're addressing, the enterprise/campus segment of the
wireless broadband market is still relatively small but growing significantly.
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What are some other reasons why this deal makes sense for Adaptive
Broadband shareholders?
One is that the broadened product lines and greater financial resources of
the combined company will reduce our exposure to both the risks normally
associated with new product introductions, and the risk of participating in the
high-growth but still emerging broadband communications market.
Today, Adaptive Broadband essentially has a single product line and is
operating in only one market segment. We depend to a considerable extent on the
financial condition of our customer base, which is the CLECs and the ISPs.
After the merger, we will have a much broader combined product base and will be
addressing not one but several market segments: the last mile access segment
we've got now, as well as the enterprise and campus network segment and the
mobile cellular provider business, in both of which Western Multiplex has a
strong presence.
Dan, one of the risks associated with any merger is integration risk. How
confident are you that the integration of the two companies will go smoothly?
Very confident, for three reasons. First of all, the respective skills of
the management on both sides are very complementary. I've already mentioned
that Western Multiplex has a very strong sales organization and sales
management. Both companies have strong engineering management and engineering
capabilities, but because we are both dealing with different kinds of product
lines, there should be few of the sorts of issues that sometimes come up in
mergers, such as which organization gets to "run the show," or whose job stays
and whose goes.
A second reason is that Western Multiplex's headquarters are approximately
100 yards away from us here in Sunnyvale; in fact, they're literally right
across the street. That, too, will considerably lessen any integration risk.
We can and do walk across the street and talk about how to do things.
The third reason, which is always critical in mergers, is our corporate
cultures. I've spent a lot of time talking to the folks at Western Multiplex,
visiting with their engineers, seeing how they do business, seeing how committed
they are to meeting customer needs, talking about technological trends and the
like, and there are a lot of similarities. So I think this will be a very
smooth and seamless integration.
Who will manage the new company?
When you're competing, as we do, with such companies as Cisco, Lucent, and
Alcatel, the more management horsepower you've got, the better. And we'll have
a very experienced and successful management team. It will be headed by
Jonathan Zakin, who is best known for building modem maker U.S. Robotics from
$18 million in revenue in 1987 to more than $3 billion in 1998, and for
overseeing the sale of U.S. Robotics to 3Com Corporation for more than $8
billion after that. Jon has also done a great job as Chairman and CEO of
Western Multiplex.
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I'm looking forward to working with him as his President and COO after the
merger, and we'll have a great management team in which both companies will be
well-represented.
Great. What's another reason why your shareholders should like the deal?
To get products developed and get them quickly to market, you need
engineers. We've got nearly one hundred qualified engineers, primarily located
at our R&D facility in Cambridge, England. They've been doing an excellent job
in coming up with new products based on our core technology and in continuing to
improve the products we already have. But to take advantage of all the
technological, product and market opportunities we've identified, we need a lot
more people like them. And Western Multiplex has them -- including a number of
engineers who have been working to develop a point-to-multipoint product for
Western Multiplex, some of whom can be redeployed following the merger to work
on our own point-to-multipoint products -- saving us a considerable amount of
time compared to what we could do on our own.
What are some of the products or product categories that the combined
company's engineers will be able to focus on? I understand, for example, that
an integrated Wireless Access Concentrator, or WAC, is something you'd like to
develop.
Right. Nobody currently has such a product, which would provide our
customers with a single end-to-end integrated, seamless solution that will go
all the way from the central office or the Internet network cloud to the end
customer premise equipment, instead of having to mix and match products and
technologies from different vendors. So by developing the WAC and integrating
our network management systems in a single, seamless, integrated solution, we
will be able to offer our customers one-stop shopping, a single seamless
solution, and do so sooner than could otherwise be possible.
How about your financial strength as a result of this transaction? Will
that be enhanced?
Yes. Western Multiplex's revenues for the most recent quarter are up 153
percent compared to the same quarter a year ago. Moreover, it's a profitable
company. As for the combined company, we expect its cash position at inception
to be about $150 million, with no long-term debt. We expect its revenues in
calendar 2000 to exceed $300 million. And we expect the financial strength of
the combined enterprise to be a real competitive advantage. It should also put
us in a good position to deal with the ups and the downs in the marketplace.
Both companies' stocks are currently a good deal lower now than they were
before the transaction was announced on November 13th. Does that concern you?
We generally don't comment on market activity. I would note, however, that
while stock prices for all companies move up and down, the strategic,
operational and financial reasons for this deal have not changed, and we
continue to firmly believe that this transaction makes tremendous sense for the
shareholders, customers and other constituents of both companies.
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Sounds good to me. Dan, thanks very much.
*This transcript includes forward-looking information and statements that are
subject to risks and uncertainties that could cause actual results to differ
materially. These statements are often identified by words such as "expect,"
"anticipated" and "intend." Statements regarding the expected completion of the
transaction are subject to the risk that the closing conditions will not be
satisfied, including the risk that regulatory approvals will not be obtained or
that the stockholders of Western Multiplex or Adaptive Broadband will not
approve the merger and that the merger will not be consummated. Statements
regarding the expected benefits of the transaction are subject to the following
risks: that expected synergies will not be achieved; that the businesses will
not be integrated successfully; that merger costs will be greater than expected;
the inability to identify, develop and achieve success for new products,
services and technologies; increased competition and its effect on the company's
pricing and need for marketing; disruption from the merger making it more
difficult to maintain relationships with customers, employees or suppliers; the
inability to establish or renew relationships with advertising, marketing,
technology, and product or component providers or suppliers; and to the general
risks associated with the companies' businesses. For additional risks relating
to the proposed merger and risks relating to the combined company see the
Registration Statement on Form S-4 (Registration No. 333-51142) filed with the
Securities and Exchange Commission on December 1, 2000. For risks about Western
Multiplex's business; see its Form S-1 filed on July 20, 2000 and subsequent
Forms 10-Q and 8-K, and for risks about Adaptive Broadband's business, see its
Form 10-K for the year ended June 30, 2000 and subsequent Forms 10-Q and 8-K, as
well as its other SEC filings.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION. Western Multiplex and Adaptive Broadband
will mail the joint proxy statement prospectus to their respective stockholders
prior to the special meeting of stockholders. The joint proxy
statement/prospectus will also be filed with the Securities and Exchange
Commission by Western Multiplex and Adaptive Broadband. Investors and security
holders may obtain a free copy of the joint proxy statement/prospectus (when it
is available) and other documents filed by Western Multiplex and Adaptive
Broadband at the Commission's web site at www.sec.gov. The joint proxy
statement/prospectus and these other documents may also be obtained for free
from the parties.
In addition to the joint proxy statement/prospectus, Western Multiplex and
Adaptive Broadband file annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission. You may read
and copy any reports, statements or other information filed by Western Multiplex
and Adaptive Broadband at the Securities and Exchange Commission public
reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at any of
the Commission's other public reference rooms in New York, New York and Chicago,
Illinois. Western Multiplex's and Adaptive Broadband's filings with the
Commission are also available to
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the public from commercial document-retrieval services and at the website
maintained by the Commission at http://www.sec.gov.
Western Multiplex, Adaptive Broadband and their respective directors and
executive officers may be deemed to be participants in the solicitation of
proxies from the security holders of Western Multiplex and Adaptive Broadband in
favor of the merger. Investors and security holders of Western Multiplex and
Adaptive Broadband may obtain additional information regarding the interests of
the foregoing people by reading the Registration Statement on Form S-4
(Registration No. 333-51142) filed with the Securities and Exchange on December
1, 2000 and the joint proxy statement/prospectus when it becomes available.
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