Montage Sets the Record Straight Regarding the Recent ISS Report and the Inferior Diodes Deal

MILPITAS, Calif.--(BUSINESS WIRE)--

Montage Technology Group Limited ("Montage") today issued the following statement regarding a report by Institutional Shareholder Services ("ISS") regarding the proposed acquisition of Pericom Semiconductor Corporation ("Pericom") PSEM by Diodes Incorporated ("Diodes") to be voted on at a special meeting of Pericom shareholders scheduled for November 20, 2015:

"We believe that ISS reached the wrong conclusion in failing to recommend that Pericom shareholders vote AGAINST the inferior Diodes transaction, a conclusion that we believe was based on a misunderstanding of a number of important facts:

  • Montage has agreed that its financially superior $18.50 all-cash offer will not be subject to any regulatory conditions. In other words, Montage is assuming ALL regulatory risk and its offer has NO regulatory conditions.
  • In addition, Montage's $18.50 per share all cash offer is not subject to ANY financing conditions.
  • The fact that Montage recently doubled its proposed reverse break-up fee from $21.5 million to $43.0 million underscores its confidence in the very high degree of financing certainty provided by CEC and Bank of China.

We believe that Pericom has run a deeply flawed sale process that has resulted in an inferior transaction with Diodes, a transaction that if completed would disenfranchise Pericom shareholders. Montage recommends that Pericom shareholders vote AGAINST the Diodes proposal on the GOLD proxy card to preserve their right to a premium transaction with Montage voting AGAINST will give a clear mandate to the Pericom Board to pursue a financially superior offer from Montage."

Given the importance of this matter for Pericom shareholders, Montage believes it's important to note some of the misunderstandings in ISS' report, in particular:

       
 

The ISS report states:

 

 

"Time-to-close also continues to nag
the Montage offer: any merger would
take 3-6 months to close, the bidder
estimates–but perhaps longer, if
regulatory approvals extend longer."

ISS simply has the facts wrong. As Montage has repeatedly said:

 

  • A Montage-Pericom transaction can close immediately following
    Pericom shareholder approval.
  • If Pericom promptly enters into a merger agreement with Montage,
    Montage can close the transaction in December 2015.
  • Montage's superior $18.50 all cash offer is not subject to any
    regulatory conditions and will provide Pericom shareholders with
    immediate payment upon closing, the same timing as the Diodes
    proposal.
  • Montage has provided for the same drop dead date as Diodes of
    March 30, 2016.
 

The ISS report states:

 

 

"The keystone in all of this is the $43
million reverse break-up fee Montage
has offered. It may be comforting, in
the way that closing one's eyes can be
comforting when facing an unpleasant
reality–but it does nothing at all to
mitigate that unpleasant reality."

ISS simply has the facts wrong. As Montage has repeatedly said:

 

  • The fact that Montage recently doubled its proposed reverse
    break-up fee from $21.5 million to $43.0 million underscores its
    confidence in the very high degree of financing certainty provided by
    CEC and Bank of China.
  • Montage has committed to depositing the reverse break-up fee into
    an escrow account with Citibank in New York.
 

The ISS report states:

 

 

"As the scale of that reverse
termination fee might suggest, any
sale to Montage faces significant
scrutiny by regulators in three
countries. These include not just the
standard US review under Hart-Scott-
Rodino (HSR), but additional scrutiny
from the Committee on Foreign
Investment in the U.S. (CFIUS) – which
has blocked sales of technology
companies to Chinese firms–as well as
by regulators in Taiwan and the
People's Republic of China (PRC)."

ISS simply has the facts wrong. As Montage has repeatedly said:

 

  • Montage does NOT need to file HSR, same as Diodes.
  • Montage REMOVED the closing conditions on CFIUS,
    Taiwan and PRC approvals
  • CFIUS - CFIUS is a voluntary filing which Montage will
    forego. Additionally, this transaction does NOT raise
    national security or critical infrastructure concerns for
    which CFIUS would intervene.
  • Ministry of Commerce ("MOFCOM") of the Government of
    the PRC – A MOFCOM filing is not required because
    Montage is a Cayman Islands corporation.
  • Taiwan – Taiwan affords the acquirer a "grace period"
    following the closing of a transaction during which time it
    may divest businesses identified by the authority. If
    Montage was required to divest Pericom's small design
    center in Taiwan, it would be done after the close of the
    Montage-Pericom transaction, and after Pericom
    shareholders receive the purchase price, at a cost entirely
    borne by Montage.
    • Any Taiwan regulation would in no way delay the
      closing of a Montage-Pericom transaction and
      Montage believes it is misleading to the Pericom
      shareholders to continue to insist otherwise.
  • Montage has assumed all regulatory risks, and all
    extensions to closing for regulatory risk have been
    eliminated.
 

The ISS report states:

 

 

"The verbal confidence in its offer
letter that Montage has committed
financing, moreover, appears to be
more style than substance. The CEC
commitment letter, for example,
'commits' funding over which it
nonetheless reserves significant
discretion, and which appears to
actually be contingent upon
unspecified conditions."

ISS simply has the facts wrong. As Montage has repeatedly said:

 

  • Montage has received fully committed financing from CEC,
    one of the largest electronics companies in China and a key
    shareholder of Montage, and Bank of China, China's most
    internationalized and diversified bank and a major source
    of financing to Chinese outbound M&A.
  • To suggest that Montage's financing is anything less than
    fully committed is to hold Montage to a higher standard
    than other similarly situated transactions with Chinese
    acquirers, which have been accepted by other U.S.-based
    targets.
  • Montage's offer is not subject to any financing conditions.
 

The ISS report states:

 

 

"Its slow progress on due diligence,
and financing requirements, also drew
the Pericom Board to question
whether a transaction with the
Chinese bidder would ever
materialize."

ISS simply has the facts wrong. As Montage has repeatedly said:

 

  • Montage and its advisors have committed significant
    amount of time and resources towards performing due
    diligence and negotiating a merger agreement with
    Pericom.
  • Pericom gave Diodes a head start relative to Montage in
    the sale negotiations despite knowing that Montage was
    open to increasing its price.
  • At a time when Montage was offering a higher price for
    Pericom shares, Pericom simply signed up its financially
    inferior $17.00 per share transaction without ever asking
    Montage for a best and final offer.
  • Montage also made multiple improvements to the merger
    agreement.

 

 

EVERY VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES.

 

Shareholders who have questions or need assistance voting their shares may contact:

 

INNISFREE M&A INCORPORATED

+ (888) 750-5834 (toll-free from the US and Canada)

+ (412) 412-232-3651 (from other countries)

 

Remember—only the latest-dated proxy card counts!

Barclays is acting as financial advisor to Montage and O'Melveny & Myers LLP is serving as legal counsel.

Montage and its directors, executive officers and certain employees may be deemed, under rules of the Securities and Exchange Commission ("SEC"), to be participants in the solicitation of proxies from Pericom shareholders in connection with Pericom's Special Meeting of Shareholders. Information about the interests in Pericom of Montage and its directors, executive officers and employees are set forth in a definitive proxy statement that was filed with the SEC on October 26, 2015 (the "Montage Proxy").

Investors are urged to read in its entirety the Montage Proxy which is available now and any other relevant documents filed with the SEC when they become available, because they contain (or will contain) important information. The Montage Proxy, and any other documents filed by Montage with the SEC, may be obtained free of charge at the SEC web site at www.sec.gov. The Montage Proxy and such other documents may also be obtained free of charge by contacting Innisfree M&A Incorporated, Montage's proxy solicitor, toll-free at: (888) 750-5834 or 501 Madison Avenue, 20th Floor, New York, New York 10022.

About Montage

Montage is a global fabless provider of analog and mixed-signal semiconductor solutions currently addressing the home entertainment and cloud computing markets. In the home entertainment market, Montage's technology platform enables the Company to design highly integrated end-to-end solutions with customized software for set-top boxes. These solutions optimize signal processing performance under demanding operating conditions typically found in emerging marketing environments. In the cloud computing market, Montage offers high performance, low power memory interface solutions that enable memory intensive server applications. Its technology platform approach allows Montage to provide integrated solutions that meet the expanding needs of customers through continuous innovation, efficient design and rapid product development. For more information regarding Montage please visit the Company's website at www.montage-tech.com.

Montage
Mark Voll, CFO
408-982-2780 or 86-21-6128-5678 x8618
or
Investors:
Innisfree M&A Incorporated
Arthur Crozier/Jennifer Shotwell/Jon Salzberger
212-750-5833
or
Media:
Joele Frank, Wilkinson Brimmer Katcher
Eric Brielmann or Jed Repko
415-869-3950
or
Mahmoud Siddig
212-355-4449

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: Press Releases
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!