CIMdata PLM Industry Summary Online Archive
23 August 2004
Acquisitions
ARM and Artisan Combine to Deliver System-on-Chip IP Solutions
ARM Holdings plc and Artisan Components, Inc. announced that they have entered into a definitive agreement under which ARM will acquire Artisan. Under the terms of the agreement, Artisan stockholders will receive $9.60 in cash and ARM stock equal to 4.41 ARM ADSs for each outstanding Artisan share. Based on closing prices for ARM ADSs as of August 20, 2004, the implied value is $33.89 per Artisan share, representing an aggregate consideration of approximately $913 million.
This transaction represents an excellent strategic combination:
• Enables the combined company to deliver a broad portfolio of system-on-chip (SoC) intellectual property (IP) to a combined customer base.
• Better positions the combined company to take advantage of growth opportunities across multiple industries as system design complexity increases in the sub-micron age.
• Highly complementary sales channels combining ARM's channel to more than 130 silicon manufacturers, with Artisan's channel to more than 2,000 companies.
• Strengthens the links between key aspects of SoC development, enabling the combined company to deliver solutions that are further optimized for power and performance.
Warren East, Chief Executive Officer of ARM, will continue as Chief Executive Officer of the combined companies, with Lucio L. Lanza, Chairman of Artisan, and Mark R. Templeton, President and Chief Executive Officer of Artisan, joining the Board of Directors of ARM as a non-executive director and an executive director, respectively, on completion of the transaction.
Directors and executive officers of ARM and Artisan have agreed to vote in favor of the acquisition in respect of shareholdings amounting to an aggregate of approximately 2.7 percent of ARM's outstanding shares and 4.6 percent of Artisan's outstanding shares.
The completion of the transaction is expected to occur in the fourth quarter of 2004 and is subject to ARM and Artisan stockholder and regulatory approvals and other customary closing conditions.
Artisan is a provider of physical IP components for the design and manufacture of complex SoC integrated circuits (ICs). The company's comprehensive product portfolio includes standard cell libraries, embedded memories, input/output cells, analog functions and high-speed interface IP. Artisan has licensed its IP components to thousands of IC design teams at more than 2,000 companies worldwide. More information about Artisan, including free library access, can be found at http://www.artisan.com
ARM has relationships with more than 130 silicon manufacturers and with all of the leading Electronic Design Automation (EDA) companies; the company offers a portfolio of microprocessor, data engine and peripheral IP as well as software and development tools. Building on complementary capabilities, ARM expects that the combined company will deliver one of the broadest ranges of SoC IP solutions to the IC design community. The combined expertise of both companies in implementing complex systems in silicon will result in highly optimized solutions for low-power and high-performance designs.
Transaction Terms
Under the terms of the agreement, Artisan stockholders will receive $9.60 in cash and 4.41 ARM ADSs for each outstanding Artisan share. Based on closing prices for ARM's ADSs as of August 20, 2004, the implied value is $33.89 per Artisan share, representing an aggregate consideration of approximately $913 million. Each Artisan stockholder will have the right to elect the percentage of the stockholder's consideration received in cash, ARM ADSs or Ordinary Shares (ORDs), subject to pro ration and the total aggregate consideration being approximately $225 million in cash and approximately 374 million in new ORDs (or approximately 125 million ADSs). The stock component of the consideration is expected to be tax-free for the stockholders of Artisan. Following completion of the transaction, on a fully diluted basis, Artisan stockholders will own approximately 26% of the combined company. The cash portion of the consideration will be funded using ARM's existing cash resources. The terms of the transaction have been unanimously approved by the Boards of Directors of both companies.
Financial Overview
As of June 30, 2004, under U.S. GAAP, Artisan had revenues and profits after taxes in the previous 12 months of $82.9 million and $17.3 million, respectively, and had net asset value of $205.1 million, of which $140.4 million was cash, cash equivalents and marketable securities. For the most recent fiscal year ended September 30, 2003, Artisan had revenues and profits after taxes of $68.5 million and $7.3 million, respectively, under U.S. GAAP.
The transaction is expected to be non-dilutive to ARM's earnings per share within 12 months from closing, excluding the impact of one-time and non-cash acquisition related charges.
Break-up Fee Arrangements
ARM has agreed to pay a break-up fee to Artisan of approximately $18 million payable upon certain termination events under the transaction agreement. Furthermore, Artisan has agreed to pay a break-up fee to ARM of approximately $31 million or $18 million, depending on the nature of the termination event, payable under the transaction agreement upon certain termination events.
Management and Board of Directors
Lucio L. Lanza, Chairman of Artisan, and Mark R. Templeton, President and Chief Executive Officer of Artisan, will join the Board of Directors of ARM following completion of the transaction, increasing the total number of directors to 12. Mark R. Templeton is expected to enter into a service contract with the Company with effect from completion of the transaction.
Approvals, Timing and Consent
The completion of the transaction is expected to occur in the fourth quarter of 2004 and is subject to ARM and Artisan stockholder and regulatory approvals, other customary closing conditions and the admission of the new ARM shares to the Official List of the UK Listing Authority and to trading on the London Stock Exchange. ARM stockholders will receive in due course a circular containing full details of the acquisition and convening an Extraordinary General Meeting, and listing particulars related to the new ARM shares to be issued as consideration for the acquisition. Artisan stockholders will receive a proxy statement in connection with Artisan's special meeting of stockholders.
ARM designs the technology that lies at the heart of advanced digital products, from wireless, networking and consumer entertainment solutions to imaging, automotive, security and storage devices. ARM's 16/32-bit RISC microprocessors, data engines, peripherals, software and tools, combined with the company's broad partner community, provide a total system solution that offers a fast, reliable path to market for leading electronics companies. More information on ARM is available at http://www.arm.com .
Important Information for Investors and Stockholders
ARM and Artisan will file a proxy statement/prospectus with the SEC in connection with the proposed transaction. ARM and Artisan urge investors and security holders to read the proxy statement/prospectus when it becomes available and any other relevant documents filed with the SEC because they will contain important information. Investors and security holders will be able to obtain these documents free of charge at the website maintained by the SEC at http://www.sec.gov In addition, documents filed with the SEC by ARM are available free of charge by contacting ARM Holdings plc Investor Relations, 110 Fulbourn Road, Cambridge, UK, CB1 9NJ, +44 (0)1223 400400, and on ARM's web site at http://www.arm.com , documents filed with the SEC by Artisan are available free of charge by contacting Artisan Components, Inc. Investor Relations, 141 Caspian Court, Sunnyvale, California, 94089, (408) 734-5600, on Artisan's web site at http://www.artisan.com or on the SEC's web site at http://www.sec.gov
ARM and ARM's directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Artisan in connection with the transaction. A description of the interests of directors and executive officers of ARM is set forth in its Annual Report on Form 20-F for the year ended December 31, 2003, which was filed with the SEC. If and to the extent that any of ARM's directors and executive officers will receive any additional benefits in connection with the transaction that are unknown as of the date of this filing, the details of those benefits will be described in the definitive proxy statement/prospectus. Investors and security holders can obtain additional information regarding the direct and indirect interests of ARM's directors and executive officers in the transaction by reading the definitive proxy statement/prospectus when it becomes available.
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