TELCOM SEMICONDUCTOR INC
8-K, EX-99, 2000-10-30
SEMICONDUCTORS & RELATED DEVICES
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                                                                    Exhibit 99.1


Media Contacts:      Mark M. Brown                    Gordon Parnell
                     Chief Financial Officer          Chief Financial Officer
                     TelCom Semiconductor, Inc.       Microchip Technology, Inc.
                     (650) 215-1411                   (480) 786-7374




    TelCom Semiconductor Announces Merger Agreement with Microchip Technology

      Expanded Analog Portfolio Accelerates Microcontroller-Attach Strategy

MOUNTAIN  VIEW,  CA - October 27, 2000 -- TelCom  Semiconductor,  Inc.  (NASDAQ:
TLCM),  a  provider  of  a  broad  spectrum  of  high  performance   linear  and
mixed-signal  integrated  circuits  solutions,  today announced a planned merger
with  Microchip  Technology  Incorporated  (NASDAQ:  MCHP) in a  stock-for-stock
transaction valued at approximately $300 million on a fully-diluted  basis based
on  Thursday's  closing  prices.   Microchip  manufactures  the  widely  popular
PICmicro(R) RISC microcontrollers  which serve 8-bit and 16-bit embedded control
applications.

Under the terms of the definitive merger agreement, if the average closing price
of  Microchip's  common stock for the ten trading days  preceding the closing of
the  transaction is between $28.30 and $32.61,  Microchip will issue a number of
shares of its common stock for each outstanding  share of TelCom equal to $15.00
divided by such 10 day average price.  If Microchip's  ten-day  average  closing
price prior to the merger is less than $28.30, then each TelCom stockholder will
receive 0.53 shares of  Microchip,  and if the ten-day  average price is greater
than $32.61, then each TelCom stockholder will receive 0.46 shares of Microchip.

TelCom expects the transaction to be completed during the first calendar quarter
of 2001 and to be immediately accretive.

<PAGE>

                TelCom Semiconductor Announces Merger Agreement
                        with Microchip Technology (Cont.)                    2-6

"We are pleased to join forces with an industry leader like Microchip," said Bob
Gargus,  President and Chief Executive Officer at TelCom.  "This is an excellent
fit from both a customer and technology perspective.  We believe our strength in
analog  products  will  further  Microchip's   leadership  in  embedded  control
applications.  Microchip's  larger sales force,  much larger  customer  base and
strong OEM and distributor  relationships will  significantly  expand the market
opportunity for TelCom's products."

"This  acquisition  is an important  milestone  for Microchip in that it greatly
accelerates our internal  efforts to expand our portfolio of stand-alone  analog
products as well as provide  additional  product  functionality  to our embedded
control  customers.  We  estimate  that there is  approximately  $1.50 of analog
product embedded around each $1.00 of our microcontrollers. One and a half years
ago,  we began  exploiting  this  opportunity  by  building  and  attaching  our
stand-alone  analog  products  to our  microcontrollers.  TelCom  brings to us a
highly  synergistic  portfolio  of analog  products  which will  accelerate  our
ability to capture this  significant  revenue  opportunity,"  said Steve Sanghi,
Microchip's President and Chief Executive Officer.

TelCom's high performance analog expertise will substantially expand Microchip's
product  initiatives  and  position  the Company as a leading  producer of power
management,   thermal  management  and  other   linear/mixed-signal   integrated
circuits. "TelCom's product position and experienced analog team accelerates our
analog product  roadmap by several years and gives us critical mass in all major
market  segments.  Analog  resources  are very  scarce in the  current  industry
environment,  and this  acquisition  will double our analog  focused  resources.
Together, we will expand Microchip's analog product portfolio and accelerate our
microcontroller-attach  strategy  much  faster  than we could do alone,"  Sanghi
said.

<PAGE>

                TelCom Semiconductor Announces Merger Agreement
                        with Microchip Technology (Cont.)                    3-6


TelCom will become a  subsidiary  of  Microchip  and  TelCom's  team of over 250
employees  will  become  part of  Microchip's  existing  analog  product  group.
Microchip  expects  to keep  all of  TelCom's  employees  and no  reductions  in
workforce are expected.

The  acquisition is intended to qualify as a pooling of interests for accounting
purposes  and to be  tax-free  to  stockholders  of  TelCom.  Completion  of the
acquisition  is  contingent  upon  approval  by  TelCom  stockholders,   on  the
expiration  or  termination   of  the   applicable   waiting  period  under  the
Hart-Scott-Rodino Antitrust Improvements Act, and on other customary conditions.

Microchip  will host a  teleconference  call on Friday,  October 27 at 8:00 a.m.
(Pacific  time)/11:00 a.m. (Eastern time) to discuss this merger. This call will
be simulcast over the World Wide Web at  www.microchip.com.  The webcast will be
available  for replay at  www.microchip.com  until 5:00 p.m.  (Pacific  time) on
Monday, October 30, 2000.

A  telephonic   replay  of  the   teleconference   will  also  be  available  at
approximately  11:00 a.m.  (Pacific time) on October 27. The  telephonic  replay
will be available  until 5:00 p.m.  (Pacific time) on Monday,  October 30, 2000.
Interested parties may listen to the replay by dialing 719-457-0820 and entering
access code 456421.

This release contains  forward-looking  statements  relating to the synergies of
Microchip's  and  TelCom's  products,   growth  of  Microchip's  customer  base,
acceleration  of Microchip's  analog  product  development,  and  development of
Microchip's and TelCom's products and services and future operating results that


<PAGE>

                TelCom Semiconductor Announces Merger Agreement
                        with Microchip Technology (Cont.)                    4-6


are based  upon the  current  expectations  and  beliefs  of the  management  of
Microchip  and TelCom and are subject to certain  risks and  uncertainties  that
could cause  actual  results to differ  materially  from those  described in the
forward looking statements. In particular,  the following factors, among others,
could cause  actual  results to differ  materially  from those  described in the
forward-looking  statements:  failure  of the  transaction  to close  due to the
failure to obtain  required  regulatory or stockholder  approvals;  difficulties
associated with successfully  integrating  Microchip and TelCom's businesses and
technologies;  costs related to the transaction; failure of the combined company
to retain and hire key  executives,  technical  personnel  and other  employees;
failure of the  combined  company to manage  its  growth and the  difficulty  of
successfully managing a larger organization;  failure of the combined company to
successfully manage its changing relationships with customers,  suppliers, value
added  resellers,  and  strategic  partners;  failure of the combined  company's
customers to accept new product  offerings;  and failure to achieve  anticipated
synergies in the merger.  Other factors that could affect the combined company's
actual results include the progress and costs of the development of its products
and services and the timing of market acceptance of those products and services.

For a detailed discussion of these other cautionary statements,  please refer to
each company's  respective filings with the Securities and Exchange  Commission,
including,  where  applicable,  their most recent filings on Form 10-K and 10-Q,
both companies'  registration  statements on Form S-3, as amended, and the joint
proxy  statement/prospectus  to be filed by the  companies as  described  below.
Microchip's  and TelCom's  filings with the SEC are available to the public from
commercial  document retrieval services and at the Website maintained by the SEC
at http://www.sec.gov.

Where You Can Find Additional Information:

Investors  and  security  holders  of  TelCom  are  advised  to read  the  proxy
statement/prospectus  regarding  the proposed  merger when it becomes  available
because it will contain important  information about the transaction.  Microchip
and TelCom  will file the proxy  statement/prospectus  with the  Securities  and

<PAGE>

                TelCom Semiconductor Announces Merger Agreement
                        with Microchip Technology (Cont.)                    5-6


Exchange Commission.  Investors and security holders of TelCom may obtain a free
copy of the proxy  statement/prospectus when it is available and other documents
filed by Microchip and TelCom with the Securities and Exchange Commission at the
Securities  and  Exchange   Commission's  Website  at  www.sec.gov.   The  proxy
statement/prospectus  and these other  documents  may also be obtained  for free
from Microchip and TelCom.

TelCom and its executive officers and directors may be deemed to be participants
in the  solicitation of proxies from  stockholders of TelCom with respect to the
transactions  contemplated by the merger agreement.  Information  regarding such
officers and  directors  is included in TelCom's  Proxy  Statement  for its 2000
Annual Meeting of Stockholders filed with the Securities and Exchange Commission
on March 10, 2000.  This document is available  free of charge at the Securities
and Exchange Commission's Website at http://www.sec.gov and from TelCom.

TelCom  Semiconductor,  Inc.  designs,  develops and markets a broad spectrum of
high-performance  linear and  mixed-signal  integrated  circuit  solutions.  The
company's  product  offering is focused in three main  product  families:  power
management,   thermal  management,   and  linear/mixed  signal  devices.   These
integrated  circuits  are  used  worldwide  in a range  of  applications  in the
wireless communications, computing, consumer electronics, networking, industrial
and other markets. The company's revenue for 1999 was $57.3 million. Company and
product   information   can  be   accessed   on   the   company's   Website   at
www.telcom-semi.com.

Microchip  Technology  Inc.  manufactures  the widely popular  PICmicro(R)  RISC
microcontrollers  that  serve  8-  and  16-bit  embedded  control  applications.
Specializing in field-programmable and mixed-signal solutions,  the company also
offers  complementary  microperipheral  products including  stand-alone  analog,

<PAGE>

                TelCom Semiconductor Announces Merger Agreement
                        with Microchip Technology (Cont.)                    6-6


interface  and  microID(TM)  RFID  devices;  serial  EEPROMs;  and the  patented
KEELOQ(R) security devices. This synergistic product portfolio targets thousands
of  applications  and a  growing  demand  for  high-performance  designs  in the
automotive, communications,  computing, consumer and industrial control markets.
The  Company's  quality  systems are ISO 9001 (1994  version)  and QS9000  (1998
version)  certified.  Microchip is headquartered near Phoenix in Chandler,  with
semiconductor fabrication facilities in Arizona and Washington; and assembly and
test operations near Bangkok,  Thailand.  Microchip employs  approximately 3,100
people worldwide and has sales offices  throughout Asia,  Europe,  Japan and the
Americas. More information on the Company can be found at www.microchip.com.

      The Microchip name and logo, PIC, PICmicro, and KEELOQ are registered
     trademarks of Microchip Technology Inc. in the USA and other countries.
    microID is a trademark of Microchip Technology Inc. in the USA and other
  countries. All other trademarks are the property of their respective owners.

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