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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(AMENDMENT NO. 3)
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. 3 amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Securities and Exchange Commission
(the "Commission") on March 18, 1999 (as subsequently amended, the "Schedule
14D-9"), 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
and as further amended and restated as of March 7, 1999, all as set forth in the
Second Amended and Restated Rights Agreement (the "Second Amended and Restated
Rights Agreement"), between VLSI and BankBoston, N.A. (formerly The First
National Bank of Boston), as Rights Agent, at a price of $17.00 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 and the related Letter of
Transmittal (which together constitute the "Philips Offer"). The 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 4. THE SOLICITATION OR RECOMMENDATION.
The response to Item 4 is hereby amended and supplemented by adding the
following:
On March 22, 1999, representatives of Credit Suisse First Boston and
Sullivan & Cromwell contacted representatives of Morgan Stanley and Latham &
Watkins, respectively, to discuss the process for initiating discussions between
VLSI and Philips.
During the week of March 22, 1999, VLSI's and Philips' advisors engaged in
discussions concerning the terms of a confidentiality and standstill agreement
pursuant to which Philips would be granted access to VLSI's senior management
and confidential business information.
On March 25, 1999, the Board held a special meeting to consider the terms of
confidentiality/standstill agreements pursuant to which VLSI would provide
Philips and other parties with access to VLSI's senior management and
confidential business information.
On March 29, 1999, VLSI issued the following press release which included
the text of a letter sent to Mr. Boonstra from Mr. Stein on that same day:
VLSI CONTINUES STRATEGIC ALTERNATIVES PROCESS
-- NO AGREEMENT REACHED WITH PHILIPS TO PARTICIPATE IN PROCESS--
SAN JOSE, CA, MARCH 29, 1999 -- VLSI Technology, Inc. (Nasdaq: VLSI) announced
today that VLSI has not reached an agreement with Royal Philips Electronics
which would allow Philips to participate in VLSI's exploration of strategic
alternatives. Despite extensive discussions between the two parties' advisers,
no agreement has been reached.
VLSI stated that VLSI has reached agreements granting other parties access to
non-public information concerning VLSI. VLSI also has established a data room
and has granted extensive senior management interviews to third parties.
"Philips asked to be included in our process of exploring VLSI's strategic
alternatives and VLSI worked with Philips to develop reasonable terms to include
Philips," said Alfred J. Stein, chairman and chief executive officer of VLSI.
"It is unfortunate that Philips has declined to participate in our process
because
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we believe that, by their participation, Philips would recognize that Philips'
offer does not reflect the strong business potential of VLSI and therefore is
inadequate."
The text of a letter sent today by Mr. Stein to Mr. Cor Boonstra, president and
chief executive officer of Royal Philips Electronics, is as follows:
By Facsimile
March 29, 1999
Mr. Cor Boonstra
President & CEO
Royal Philips Electronics
Rembrandt Tower
Amstelplein 1
1096 HA Amsterdam
The Netherlands
Dear Mr. Boonstra:
I was disappointed to hear from my advisory team that VLSI and Philips were
unable to reach an agreement that would allow Philips to participate as one of
the companies exploring strategic alternatives with VLSI.
When Philips asked to participate in VLSI's process, VLSI's advisers devoted
significant time to the issue and the VLSI Board of Directors held a special
meeting to discuss the terms under which Philips could gain access to non-public
information concerning VLSI and its business.
The agreement VLSI ultimately proposed-- essentially a 45-day truce between the
two companies-- was quite simple:
In exchange for the same access to non-public information and senior management
that VLSI made available to other parties in the process, Philips would agree to
take no action concerning its tender offer and consent solicitation until May
10, 1999.
VLSI would set May 10, 1999 as the record date for both its consent solicitation
and 1999 Annual Meeting of Stockholders, and would hold the Annual Meeting on
June 8, 1999.
In addition, to preserve Philips' flexibility, VLSI would agree that the 45-day
standstill would terminate if VLSI entered into a strategic transaction with a
party other than Philips.
It is unfortunate that Philips has declined to participate in VLSI's process
because we believe that, by Philips' participation, Philips would recognize that
Philips' offer does not reflect VLSI's excellent technology and strong business
potential. Our customer product bookings have strengthened. For example, after
the commencement of your offer, VLSI received the largest single order in VLSI
history. By remaining outside of VLSI's process, Philips may continue to make
inaccurate assumptions about VLSI's business.
The other Directors of VLSI and I remain ready to include you in our process of
exploring strategic alternatives.
Very Truly Yours,
/s/ Alfred J. Stein
Alfred J. Stein
Chairman and CEO
VLSI Technology, Inc.
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As announced on March 18, 1999, the VLSI Board of Directors unanimously
determined that the unsolicited cash tender offer by Philips for all of the
outstanding shares of VLSI at $17.00 per share is inadequate and not in the best
interests of its stockholders, and therefore unanimously recommended that VLSI's
stockholders reject the Philips offer and not tender their shares to Philips.
The VLSI Board also unanimously determined that VLSI should explore its
strategic alternatives, including a merger, sale or recapitalization of VLSI.
The VLSI Board said those alternatives could include negotiations with
interested parties, including Philips.
VLSI Technology, Inc. designs and manufactures custom and semi-custom integrated
circuits for leading firms in the wireless communications, networking, consumer
digital entertainment and advanced computing markets. The company is based in
San Jose, Calif. with 1998 revenues from continuing operations of $547.8
million, and approximately 2,200 employees worldwide. Information related to
VLSI Technology is available at VLSI's homepage, www.vlsi.com.
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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: March 29, 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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