(June 22, 2008) MILPITAS, CA and NORWOOD, MA — Credence Systems Corporation and LTX Corporation, both providers of automated test equipment (ATE) for the worldwide consumer semiconductor industry, have entered into a definitive agreement to combine the two companies in a tax-free, all-stock merger of equals. Under the terms of the agreement, Credence shareholders will reportedly receive shares of LTX common stock based on an exchange ratio that will be determined at the closing of the merger to cause Credence shareholders to own 50.02% of the outstanding shares of the combined company and LTX shareholders to own 49.98% of the outstanding shares.
The new company will address the broad, divergent test requirements of the wireless, computing, automotive and entertainment market segments by offering a complementary portfolio of technologies, the largest installed base in the Asia-Pacific region, and a global network of strategically deployed applications and support resources, according to a press release.
Under the terms of the agreement, Lavi Lev, president and CEO of Credence, will become executive chairman of the combined company for a transitional period following the merger. David Tacelli, CEO and president of LTX, will become CEO and president; and Mark Gallenberger, CFO and V.P. of LTX, will become CFO. Casey Eichler, senior V.P. and CFO of Credence, has agreed to remain with the combined company through a transition period. The board of directors of the combined company will include five directors designated by LTX (including Tacelli), and four directors designated by Credence (including Lev).
“I am very excited about joining forces with LTX. This merger, from a technical and business point of view, represents the logical next step for both companies’ long-term growth,” said Lev. “We believe the combined strength of our technical expertise in RF, digital, mixed-signal and analog, coupled with a complementary product portfolio, will benefit our customers as they test and deploy high volume, highly integrated devices into their respective market segments. From a business perspective, the merger broadens our customer base and provides a strong opportunity for growth.”
“The technical and business challenges faced by our customers continue to intensify as time to market shrinks and margins are pressured by demands for new features at lower prices,” said Tacelli, “Now more than ever, it is vital we deliver cost optimized test solutions focused on our customers’ specific technologies, product mix and device volume levels. We believe the timely merger of Credence and LTX enables us to build a test company with the financial strength, growth opportunities, critical mass, and operational efficiency to lead the industry as it faces these challenges.”
“We expect the combination to drive efficiencies associated with operating a larger business, and we anticipate annual cost savings of approximately $25 million at the end of the integration period,” noted Gallenberger. “The transaction is expected to be accretive on a non-GAAP basis, excluding restructuring charges, within 12 months of combined operations and realization of the cost savings.”
The merger is subject to approval by both companies’ stockholders, as well as the satisfaction of customary closing conditions and regulatory approvals. The boards of directors of both companies have unanimously approved the agreement and recommend their stockholders vote in favor of it. Pending regulatory approval, the companies expect the transaction to be completed by the end of September 2008.