ARM Acquires Artisan

ARM Holdings acquires Artisan Components for approximately $913M to broaden its portfolio of system-on chip intellectual property

August 26, 2004

4 Min Read

CAMBRIDGE, U.K. and SUNNYVALE, Calif. -- ARM Holdings plc (LSE: ARM); (Nasdaq: ARMHY) and Artisan Components, Inc. (Nasdaq: ARTI) today announced that they have entered into a definitive agreement under which ARM will acquire Artisan.

Highlights

  • 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 one of the industry's broadest portfolios of system-on-chip (SoC) intellectual property (IP) to their extensive, 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.



    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.

    ARM Holdings plc

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