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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(AMENDMENT NO. 9)
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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VLSI TECHNOLOGY, INC.
(Name Of Subject Company)
VLSI TECHNOLOGY, INC.
(Name Of Person(s) Filing Statement)
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title Of Class Of Securities)
918270109
(Cusip Number Of Class Of Securities)
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ALFRED J. STEIN
CHIEF EXECUTIVE OFFICER
VLSI TECHNOLOGY, INC.
1109 MCKAY DRIVE
SAN JOSE, CALIFORNIA 95131
(408) 434-3100
(Name, Address And Telephone Number Of Person Authorized To
Receive Notice And Communications On Behalf Of Person(s) Filing Statement)
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COPIES TO:
CHRISTOPHER L. KAUFMAN
LATHAM & WATKINS
135 COMMONWEALTH DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 328-4600
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This Amendment No. 9 amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9 (as subsequently amended, the "Schedule 14D-9")
filed with the Securities and Exchange Commission (the "Commission") on March
18, 1999, by VLSI Technology, Inc., a Delaware corporation ("VLSI"), relating to
the cash tender offer by Koninklijke Philips Electronics N.V., a company
organized under the laws of The Netherlands ("Philips"), and KPE Acquisition
Inc. ("KPE"), a Delaware corporation and an indirect wholly owned subsidiary of
Philips, to purchase all outstanding shares of Common Stock, par value $.01 per
share (the "Common Stock"), of VLSI including the associated preferred stock
purchase rights (the "Rights" and, together with the Common Stock, the "Shares")
issued pursuant to the Common Share Rights Agreement, dated as of November 7,
1989, as amended on August 12, 1992, as amended and restated on August 24, 1992,
as further amended and restated as of March 7, 1999, and as further amended on
May 1, 1999 (as amended and restated, the "Second Amended and Restated Rights
Agreement"), between VLSI and BankBoston, N.A. (formerly The First National Bank
of Boston), as Rights Agent. Philips and KPE have offered to purchase the Shares
for $21.00 per Share, net to the seller in cash, upon the terms and subject to
the conditions set forth in KPE's Offer to Purchase dated March 5, 1999, as
amended and supplemented by the Supplement to the Offer to Purchase dated May 5,
1999 and the related revised Letter of Transmittal (which together constitute
the "Amended Philips Offer"). The Amended Philips Offer is disclosed in a Tender
Offer Statement on Schedule 14D-1, dated March 5, 1999 (as subsequently amended,
the "Schedule 14D-1"), as filed with the Commission. Unless otherwise indicated,
all capitalized terms used but not defined shall have the meanings ascribed to
them in the Schedule 14D-9.
ITEM 2. TENDER OFFER OF THE BIDDER.
The description under Item 2 is hereby amended and supplemented by adding
the following information:
The Amended Philips Offer is being made pursuant to an Agreement and Plan of
Merger, dated as of May 1, 1999, among Philips, KPE and VLSI (the "Merger
Agreement"). The Merger Agreement provides that following consummation of the
Amended Philips Offer, subject to the other conditions contained in the Merger
Agreement, including, if required by law, obtaining the necessary vote of VLSI's
stockholders in favor of the Merger Agreement, KPE will be merged with and into
VLSI (the "Merger") and each outstanding Share (other than Shares owned by
Philips, KPE or their subsidiaries, and other than any Shares held by
stockholders who perfect their dissenters' rights under Delaware law) will be
converted into the right to receive $21.00 in cash.
ITEM 3. IDENTITY AND BACKGROUND.
The description under Item 3 is hereby amended and supplemented by adding
the following information:
THE MERGER AGREEMENT.
On May 1, 1999, the Merger Agreement was executed by VLSI, Philips and KPE.
A summary of the Merger Agreement is contained in Section 7 of the Supplement to
the Offer to Purchase, which has been filed with the Commission as exhibit
(a)(15) to Philips' Schedule 14D-1. Such summary is incorporated by reference
herein and should be read in its entirety for a more complete description of the
terms and provisions of the Merger Agreement. The Merger Agreement is attached
as Exhibit 36 to Amendment No. 8 to the Schedule 14D-9 filed on May 3, 1999 and
is incorporated by reference herein.
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
The description under Item 4(a) is hereby amended and supplemented by adding
the following information:
On April 7, 1999, Philips and VLSI entered into the Philips
Confidentiality/Standstill Agreement pursuant to which VLSI agreed that it would
provide to Philips and its affiliates access to VLSI's senior management and
certain non-public information concerning VLSI and its affairs.
On April 8 and April 9, 1999, representatives of Philips met with
representatives of VLSI to conduct due diligence investigations of VLSI's
business. Follow-up due diligence investigations continued through the week of
April 24, 1999.
On April 19, 1999, Morgan Stanley and Hambrecht & Quist sent a letter to
third parties, including Philips, inviting the submission of an offer to acquire
all of VLSI's Shares pursuant to the enclosed form of merger agreement. On April
21, 1999, Morgan Stanley and Hambrecht & Quist set April 30, 1999 as the
deadline for submitting offers.
On April 30, 1999, Philips submitted its $21.00 per Share offer together
with Philips' proposed changes to the form merger agreement circulated by Morgan
Stanley and Hambrecht & Quist.
Beginning on the evening of April 30, 1999, and continuing through the
evening of May 1, 1999, Sullivan & Cromwell and Latham & Watkins, counsel to
Philips and VLSI, respectively, negotiated the terms of a definitive merger
agreement. The Board unanimously approved the Merger Agreement at a special
meeting of the Board held on May 1, 1999. Philips, KPE and VLSI executed the
Merger Agreement in the evening on May 1, 1999.
THE BOARD HAS UNANIMOUSLY DETERMINED THAT EACH OF THE AMENDED PHILIPS OFFER
AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF
VLSI, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING THE AMENDED PHILIPS OFFER AND THE MERGER, HAS DECLARED THAT
THE MERGER AGREEMENT IS ADVISABLE AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE
AMENDED PHILIPS OFFER AND TENDER THEIR SHARES PURSUANT TO THE AMENDED PHILIPS
OFFER.
The description under Item 4(b) is hereby amended and supplemented by adding
the following information:
In reaching its conclusions with respect to the Amended Philips Offer, the
Board considered the following factors:
(1) The terms and conditions of the Amended Philips Offer and the Merger
Agreement, including the price to be paid in the Amended Philips Offer and the
Merger which is a 95% premium over the unaffected stock price on February 25,
1999; and
(2) The presentations by Morgan Stanley and Hambrecht & Quist concerning
VLSI and the financial aspects of the Amended Philips Offer as well as the oral
and written opinions of each of Morgan Stanley and Hambrecht & Quist stating
that, as of the date of such opinions, the Amended Philips Offer and the Merger
are fair, from a financial point of view, to holders of Shares, other than
Philips and its affiliates. The full text of the opinions, each dated May 1,
1999, setting forth the assumptions made, matters considered and limitations on
the review undertaken, are attached hereto as Exhibits 40 and 41, respectively,
and are incorporated by reference herein.
The Board did not find it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the Board may have given
different weights to different factors.
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A copy of the letter to VLSI's stockholders communicating the Board's
recommendation is filed as Exhibit 42 to the Schedule 14D-9 and is incorporated
by reference herein.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
The description under Item 6 is hereby amended and supplemented by adding
the following information:
On April 16, 1999, Mr Stein exercised options for 303,410 Shares at an
average exercise price of $13.13 per Share. VLSI loaned Mr. Stein $3,984,010 to
finance Mr. Stein's purchase of the Shares. The loan is unsecured, is due in
2004 and has an interest rate of 5.28% per annum. On April 19, 1999, Thierry
Laurent exercised options, that were soon to expire, to purchase 3,500 Shares at
an exercise price $4.50 per Share.
To the best of VLSI's knowledge, except to the extent such action could
subject them to liability pursuant to the federal securities laws or except to
the extent restricted by the terms of the plans under which such Shares were
issued, all of its executive officers, directors or affiliates currently intend
to tender any Shares which are held of record or beneficially owned by such
persons pursuant to the Amended Philips Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
The description under Item 7 is hereby amended and supplemented by adding
the following information:
On May 1, 1999, VLSI entered into the Merger Agreement with Philips and KPE.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The description under Item 8 is hereby amended and supplemented by adding
the following information:
THE RIGHTS AGREEMENT
At its meeting on May 1, 1999, the Board adopted an amendment to the Second
Amended and Restated Rights Agreement in order to render the Rights inapplicable
to the execution of the Merger Agreement, the Merger and other transactions
contemplated by the Merger Agreement, including the consummation of the Amended
Philips Offer.
LITIGATION
On May 4, 1999, KPE filed a notice of dismissal dismissing its complaint
against VLSI filed March 5, 1999.
DELAWARE TAKEOVER STATUTE
As a Delaware corporation, VLSI is subject to Section 203 ("Section 203") of
the Delaware General Corporation Law (the "DGCL"). Under Section 203, certain
"business combinations" between a Delaware corporation whose stock is publicly
traded or held of record by more than 2,000 stockholders and an "interested
stockholder" are prohibited for a three-year period following the date that such
a stockholder became an interested stockholder, unless, among other possible
exemptions, the transaction in which the stockholder became an interested
stockholder or the business combination was approved by the board of directors
of the corporation before such other party to the business combination became an
interested stockholder. The term "business combination" is defined generally to
include mergers or consolidations
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between a Delaware corporation and an interested stockholder, transactions with
an interested stockholder involving the assets or stock of the corporation or
its majority-owned subsidiaries and transactions which increase an interested
stockholder's percentage ownership of stock. The term "interested stockholder"
is defined generally as a stockholder who, together with affiliates and
associates, owns (or, within three years prior, did own) 15% or more of a
Delaware corporation's voting stock. An owner includes a person who has the
right to acquire such stock, including upon the exercise of an option.
In accordance with the Merger Agreement and Section 203, at its meeting on
May 1, 1999, the Board unanimously approved the Amended Philips Offer and the
Merger and determined to make the restrictions of Section 203 inapplicable to
the Amended Philips Offer and the Merger.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Item 9 is hereby amended by the addition of the following new exhibits:
40. Opinion of Morgan Stanley & Co. Incorporated dated May 1, 1999.*
41. Opinion of Hambrecht & Quist LLC dated May 1, 1999.*
42. Letter to VLSI's stockholders dated May 5, 1999.*
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* Included in materials being distributed to stockholders of VLSI.
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
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Dated: May 5, 1999 VLSI TECHNOLOGY, INC.
By: /s/ Alfred J. Stein
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Name: Alfred J. Stein
Title: Chairman of the Board and
Chief Executive Officer
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EXHIBIT 40
MORGAN STANLEY DEAN WITTER
2725 SAND HILL ROAD
BUILDING C -- SUITE 200
MENLO PARK, CALIFORNIA 94025
(650) 234-5500
May 1, 1999
Board of Directors
VLSI Technology, Inc.
1109 McKay Drive
San Jose, CA 95131
Members of the Board:
We understand that VLSI Technology, Inc. ("VLSI" or the "Company"),
Koninklijke Philips Electronics N.V. ("Philips") and KPE Acquisition Inc., a
wholly owned subsidiary of Philips ("KPE"), propose to enter into an Agreement
and Plan of Merger, substantially in the form of the draft dated May 1, 1999
(the "Merger Agreement"), which provides, among other things, for (i) the
commencement by Acquisition Sub of a tender offer (the "Tender Offer") for all
outstanding shares of common stock, par value $0.01 per share (the "Common
Stock") of VLSI for $21.00 per share net to the seller in cash, and (ii) the
subsequent merger (the "Merger") of Acquisition Sub with and into VLSI. Pursuant
to the Merger, VLSI will become a wholly owned subsidiary of Philips and each
outstanding share of Common Stock, par value $0.01 per share of VLSI, other than
shares held in treasury or held by Philips or any affiliate of Philips or as to
which dissenters' rights have been perfected, will be converted into the right
to receive $21.00 per share in cash. The terms and conditions of the Tender
Offer and the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the consideration to be
received by the holders of shares of Common Stock pursuant to the Merger
Agreement is fair from a financial point of view to the holders of Common Stock
other than Philips and its affiliates.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and other financial and
operating data concerning the Company prepared by the management of
the Company;
(iii) reviewed certain financial projections prepared by the management of
the Company;
(iv) discussed the past and current operations and financial condition and
the prospects and business strategy of the Company with senior
executives of the Company;
(v) reviewed the reported prices and trading activity for the Common Stock;
(vi) compared the financial performance of the Company and the prices and
trading activity of the Common Stock with that of certain other
comparable publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among representatives of
the Company, Philips, certain other parties, and their financial and
legal advisors;
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VLSI Technology, Inc.
May 1, 1999
Page 2
(ix) reviewed the draft Merger Agreement dated May 1, 1999; and
(x) performed such other analyses as we have deemed appropriate.
We have assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of the
Company. We have not made any independent valuation or appraisal of the assets
or liabilities of the Company, nor have we been furnished with any such
appraisals. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in any filing made by the Company with the Securities and Exchange Commission.
This opinion is not intended to be and shall not constitute a recommendation to
any holder of Common Stock as to whether to tender shares of Common Stock
pursuant to the Tender Offer, to accept the consideration to be provided in the
Merger, or as to how such stockholder should vote on the Merger.
We have acted as financial advisor to the Board of Directors of the Company
in connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory services to Philips on matters unrelated to VLSI and have
received fees for the rendering of those services.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the consideration to be received by the holders of shares of Common
Stock pursuant to the Merger Agreement is fair from a financial point of view to
the such holders of Common Stock other than Philips and its affiliates.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ CHARLES R. CORY
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Charles R. Cory
Managing Director
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EXHIBIT 41
HAMBRECHT & QUIST LLC
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ONE BUSH STREET
SAN FRANCISCO, CA 94104
(415) 439-3000
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May 1, 1999
Confidential
The Board of Directors
VLSI Technology, Inc.
1109 McKay Drive
San Jose, CA 95131
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of common stock (the "Common
Stock") of VLSI Technology, Inc. ("VLSI" or the "Company") of the consideration
to be received by such shareholders in connection with the proposed merger of
KPE Acquisition Inc. ("Merger Sub"), a wholly owned subsidiary of Koninklijke
Philips Electronics N.V. ("Philips"), with and into VLSI (the "Proposed
Transaction") pursuant to the Agreement and Plan of Merger to be dated as of May
1, 1999, among Philips, Merger Sub, and VLSI (the "Agreement").
We understand that the terms of the Agreement provide, among other things
for the commencement by Merger Sub of a tender offer (the "Tender Offer") for
all outstanding shares of Common Stock of VLSI for $21.00 per share net to the
seller in cash. Pursuant to the Proposed Transaction, VLSI will become a wholly
owned subsidiary of Philips and each outstanding share of Common Stock, par
value $0.01 per share of VLSI, other than shares held in treasury or held by
Philips or as to which dissenters' rights have been perfected, will be converted
into the right to receive $21.00 per share in cash. The terms and conditions of
the Tender Offer and the Proposed Transaction are more fully set forth in the
Agreement.
Hambrecht & Quist LLC ("Hambrecht & Quist"), as part of its investment
banking services, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, strategic transactions,
corporate restructurings, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. We have acted as a financial advisor to the Board of
Directors of VLSI in connection with the Proposed Transaction, and we will
receive a fee for our services, which include the rendering of this opinion.
In the past, we have provided investment banking and other financial
advisory services to VLSI and have received fees for rendering these services.
Hambrecht & Quist served as co-manager in the Company's February 1983 initial
public offering as well as the Company's June 1995 follow-on offering and
received fees for general financial advisory services performed in 1991, 1992
and 1993. In the ordinary course of business, Hambrecht & Quist acts as a market
maker and broker in the publicly traded securities of VLSI and receives
customary compensation in connection therewith. In the ordinary course of
business, Hambrecht & Quist actively trades in the equity and derivative
securities of VLSI for its own account and
SAN FRANCISCO - NEW YORK - BOSTON - NEWPORT BEACH - SAN DIEGO - LONDON
MEMBERS NEW YORK STOCK EXCHANGE - AMERICAN STOCK EXCHANGE - PACIFIC STOCK
EXCHANGE
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The Board of Directors
VLSI Technology, Inc.
Page 2
for the accounts of its customers and, accordingly, may at any time hold a long
or short position in such securities.
In connection with our review of the Proposed Transaction, and in arriving
at our opinion, we have, among other things:
(i) reviewed the publicly available consolidated financial statements of
VLSI for recent years and interim periods to date and certain other
relevant financial and operating data of VLSI (including its capital
structure) made available to us from published sources and from the
internal records of VLSI;
(ii) reviewed certain internal financial statements and other financial and
operating data concerning the Company prepared by the management of the
Company;
(iii) reviewed certain financial projections prepared by the management of
the Company;
(iv) discussed the operations, business strategy, financial condition and
prospects of VLSI with certain members of senior management;
(v) reviewed the recent financial performance, reported prices and trading
activity for the common stock of VLSI and compared such information and
certain financial information for VLSI with similar information for
certain other companies engaged in businesses we consider comparable;
(vi) reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions;
(vii) participated in discussions and negotiations among representatives of
the Philips and their financial and legal advisors;
(viii) reviewed a draft of the Agreement dated May 1, 1999; and
(ix) performed such other analyses and examinations and considered such
other information, financial studies, analyses and investigations and
financial, economic and market data as we deemed relevant.
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of all of the information concerning VLSI considered in connection
with our review of the Proposed Transaction, and we have not assumed any
responsibility for independent verification of such information. We have not
prepared any independent valuation or appraisal of any of the assets or
liabilities of VLSI, nor have we conducted a physical inspection of the
properties and facilities of the Company. With respect to the financial
forecasts and projections made available to us and used in our analysis, we have
assumed that they reflect management's best currently available estimates and
judgments of the expected future financial performance of VLSI. Our opinion is
necessarily based upon market, economic, financial and other conditions as they
exist and can be evaluated as of the date of this letter and any change in such
conditions would require a reevaluation of this opinion.
It is understood that this letter is for the information of the Board of
Directors and may not be used for any other purpose without our prior written
consent; provided, however, that this letter may be reproduced in full in any
filing made by the Company in respect to the Proposed Transaction. This letter
does not constitute a recommendation to any stockholder of Common Stock as to
whether to tender shares of Common Stock pursuant to the Tender Offer, to accept
the consideration to be provided in the merger, or as to how such stockholder
should vote on the Proposed Transaction.
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The Board of Directors
VLSI Technology, Inc.
Page 3
Based upon and subject to the foregoing and after considering such other
matters as we deem relevant, we are of the opinion that as of the date hereof
the consideration to be received by the holders of the Common Stock in the
Proposed Transaction is fair to such holders from a financial point of view.
Very truly yours,
HAMBRECHT & QUIST LLC
By /s/ PAUL B. CLEVELAND
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Paul B. Cleveland
Managing Director
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EXHIBIT 42
[LOGO]
May 5, 1999
To Our Stockholders:
We are pleased to inform you that VLSI Technology, Inc. has entered into a
merger agreement with Koninklijke Philips Electronics N.V., which provides for
an increase in the price offered in the Philips tender offer for all outstanding
common shares of VLSI from $17.00 per share to $21.00 per share. The Philips
tender offer will be followed by a merger of a Philips subsidiary with VLSI. In
the merger, each VLSI share which is not purchased in the Philips tender offer
(other than shares owned by Philips and its subsidiaries and shares as to which
dissenters' rights are perfected) will be converted into the right to receive
$21.00 in cash.
THE BOARD OF DIRECTORS OF VLSI HAS UNANIMOUSLY DETERMINED THAT EACH OF THE
PHILIPS TENDER OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE STOCKHOLDERS OF VLSI, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING THE PHILIPS TENDER OFFER AND THE MERGER, HAS
DECLARED THAT THE MERGER AGREEMENT IS ADVISABLE AND RECOMMENDS THAT STOCKHOLDERS
ACCEPT THE PHILIPS TENDER OFFER AND TENDER THEIR SHARES PURSUANT TO THE PHILIPS
TENDER OFFER.
Enclosed are the Philips Supplement to its Offer to Purchase dated March 5,
1999, and a revised Letter of Transmittal. These documents set forth the amended
terms and conditions of the Philips tender offer and contain other important
information relating to the Philips tender offer and the merger. These documents
also provide instructions as to how to tender your VLSI shares. Also enclosed is
a copy of an amendment to VLSI's Schedule 14D-9 which describes in more detail
the reasons for your Board's decision. We urge you to read all of these
materials carefully.
On behalf of the management and directors of VLSI, we thank you sincerely
for your loyal support.
Sincerely,
/s/ ALFRED J. STEIN
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CHIEF EXECUTIVE OFFICER
