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
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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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