SAN JOSE, Calif.-Despite extensive discussions between the two companies, VLSI Technology Inc. and Royal Philips Electronics have not yet reached an agreement that would allow Philips to participate in VLSI’s exploration of strategic alternatives, which could include a merger, sale or recapitalization, said VLSI.
Alfred J. Stein, chairman and chief executive officer of VLSI, said his company has “worked with Philips to develop reasonable terms to include them.”
“It is unfortunate that Philips has declined to participate in our process because we believe that by their participating, Philips would recognize its offer does not reflect the strong business potential of VLSI and therefore is inadequate,” said Stein.
In a March 29 letter sent from Stein to Cor Boonstra, Philip’s president and CEO, Stein outlined the agreement VLSI proposed. The agreement stated:
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.
VLSI would set May 10 as the record date for both its consent solicitation and 1999 annual meeting of stockholders and would hold the meeting June 8.
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.
As announced on March 18, the VLSI board of directors unanimously determined the unsolicited $777 million cash offer by Philips for all of VLSI’s outstanding shares at $17 per share was inadequate, and urged VLSI stockholders to reject the offer. VLSI shares already are trading more than $2 above Philip’s offer.
