OTTAWA, June 25 /CNW Telbec/ - Zarlink Semiconductor Inc. (NYSE/TSX:ZL)
today announced it has entered into an agreement to acquire privately held
Legerity Holdings, Inc., a leading developer and supplier of voice ICs
(integrated circuits) for carrier, enterprise and residential gateway
Under the terms of the agreement, Zarlink will acquire Legerity for
US $134.5 million in cash, subject to working capital adjustments. Zarlink
intends to fund this acquisition through a combination of its cash resources
and, as required, draw down on a bridge facility of up to US$50 million.
Zarlink has secured a commitment letter for the financing for the transaction
through a syndicate of lenders led by CIBC and including National Bank of
Canada, the Royal Bank of Canada and the Bank of Nova Scotia. CIBC World
Markets acted as an exclusive financial advisor to Zarlink on the transaction.
The commitment letter permits the reduction or elimination of the bridge
facility by the issuance of debt or equity securities. The bridge facility
will be cancelled to the extent not drawn down at the closing of the
acquisition. The transaction is expected to close in late July, subject to
closing conditions, including expiration or termination of the waiting period
under the U.S. Hart-Scott-Rodino Antitrust Act.
"This acquisition will accelerate and expand Zarlink's plans for the
voice-over-packet market," said Kirk K. Mandy, President and CEO, Zarlink
Semiconductor. "Both companies are designing complementary technologies that
enable high-quality voice services. We share a very similar customer base but
are not direct competitors. As a result, we expect there to be substantial
cross-selling opportunities across a larger customer base and plan to deliver
more integrated, higher-value solutions for the rapidly growing
voice-over-Internet and voice-over-cable markets."
"Combining Zarlink and Legerity creates a well positioned semiconductor
company with the scale necessary to compete effectively in a consolidating and
growing network communications industry," said Hank Perret, President and CEO,
Legerity. "Legerity brings to Zarlink field-proven technologies, engineering
knowledge and established customer relationships to help build a fast-growing,
"I would like to welcome the Legerity employees and management team to
Zarlink," said Dr. Henry Simon, Chairman of the Board of Zarlink
Semiconductor. "There is no question that their technical expertise and market
knowledge will be of great benefit to the combination of Zarlink and Legerity
in building a strong and growing network communications portfolio."
Legerity, headquartered in Austin Texas with 216 employees globally, is a
leading supplier of analog voice technologies for carrier, enterprise and
residential gateway equipment. With over 750 million chipsets deployed,
Legerity utilizes proprietary processes to offer industry-leading performance
and IC integration. Through comprehensive reference designs and focused
customer support, the company provides quick time-to-market solutions while
minimizing the customers' cost of development.
Legerity's growth is fueled by service providers, including telephone and
cable system operators, who are bundling triple-play telephone, television and
Internet services for enterprise and residential customers. With the continued
evolution to next-generation packet networks and the global availability of
broadband connectivity, equipment manufacturers have designed Legerity's
products into fiber-based access equipment as well as cable and DSL (digital
subscriber line) residential gateways.
Zarlink's broad portfolio of network synchronization, voice enhancement
and telecom-related products will be combined with Legerity's products and
technologies to create a powerful platform for the growing deployment of
next-generation networks. Legerity President and CEO Hank Perret will lead the
creation of a combined network communications product portfolio. Mr. Perret
will report to Zarlink President and CEO Kirk Mandy. A number of Legerity's
executives will be joining Zarlink's management team.
Zarlink's focus on growth opportunities in optoelectronics, ultra
low-power medical telemetry and analog foundry remains unchanged by this
Over the past three years Legerity has grown revenue from US$88 million
in calendar year 2004 to US$113 million in calendar year 2006. For the
calendar year 2006, income from operations was US$5.1 million and net income
was US$4.1 million.
Beginning in the current fiscal year, this transaction is expected to be
accretive and provide annualized synergies in excess of US$7 million.
Analyst Conference Call
An open conference call for analysts will be held today beginning at
5:00 p.m. EDT. Investors, media and other parties are listen-only. Please dial
416-644-3415 or 1-800-733-7560. The replay number is 416-640-1917 (passcode
21237870No.) or 1-877-289-8525 (passcode 21237870No.). The replay is available
until midnight, Monday, July 9, 2007. A live audio webcast will be available
through www.newswire.ca (Canada NewsWire) or from the Company's website at
About Zarlink Semiconductor
For over 30 years, Zarlink Semiconductor has delivered semiconductor
solutions that drive the capabilities of voice, enterprise, broadband and
wireless communications. The Company's success is built on its technology
strengths including voice and data networks, optoelectronics and ultra
low-power communications. For more information, visit www.zarlink.com.
About Legerity Holdings, Inc.
Legerity is a trusted name in voice integrated circuits (ICs) for
high-voltage, analog/mixed signal semiconductor and software technologies.
Legerity has years of demonstrated expertise in multiple voice technologies,
world-class factory and field engineering support with a "high touch" customer
philosophy, and consistent, reliable, high volume supply of premium quality IC
components. Headquartered in Austin, Texas, Legerity supports the needs of a
global customer base through proprietary semiconductor technologies, superior
manufacturing processes, and more than 500 U.S. and international patents.
Visit Legerity on the Web at www.legerity.com.
Shareholders and other individuals wishing to receive, free of charge,
copies of the reports filed with the U.S. Securities and Exchange Commission
and Regulatory Authorities, should visit the Company's web site at
www.zarlink.com or contact Investor Relations.
Certain statements in this press release constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance, or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties and assumptions include,
among others, the following: our dependence on the successful development and
market introduction of new products; our ability to successfully integrate
Legerity and any businesses acquired in the future; our reliance on key
personnel; any potential undisclosed liabilities associated with the Legerity
acquisition; the potential adverse effect on critical reference design
partners who may object to the Legerity acquisition; our ability to continue
to operate profitably and generate positive cash flows in the future; our
dependence on our foundry suppliers and third-party subcontractors; order
cancellations and deferrals by our customers; and other factors referenced in
our Annual Report on Form 20-F. Investors are encouraged to consider the risks
detailed in this filing.
Zarlink and the Zarlink Semiconductor logo are trademarks of Zarlink
For further information:
For further information: Ed Goffin, Media Relations, (613) 270-7112,
firstname.lastname@example.org; Mike McGinn, Investor Relations, (613) 270-7210,