SMSC to acquire Conexant Systems

JANUARY 10, 2011 -- SMSC (formerly known as Standard Microsystems; NASDAQ: SMSC) has agreed to purchase all of the outstanding shares of Conexant Inc. in a stock and cash transaction valued at approximately $284 million, including the assumption of Conexant's net debt. The transaction has been approved by the boards of directors of both companies.

JANUARY 10, 2011 -- SMSC (formerly known as Standard Microsystems Corp.; NASDAQ: SMSC) has agreed to purchase all of the outstanding shares of Conexant Inc. in a stock and cash transaction valued at approximately $284 million, including the assumption of Conexant's net debt. The transaction has been approved by the boards of directors of both companies.

Conexant stockholders will receive approximately $2.25 per Conexant share, consisting of $1.125 in cash and a fraction of a share of SMSC common stock equal to $1.125 divided by the volume weighted average price of SMSC common stock for the 20 trading days ending on the second trading day prior to closing, but in no event more than 0.04264 nor less than 0.03489 shares of SMSC common stock. The total cash consideration to be paid in the transaction is approximately $98 million and the total number of shares of SMSC common stock to be issued (including the assumption of outstanding Conexant restricted stock units) is approximately 2.9 million to 3.6 million.

The transaction is expected to close in the first half of calendar 2011 subject to the satisfaction of regulatory requirements, approval by Conexant shareholders and other customary closing conditions.

"We believe that combining the growth potential of Conexant and SMSC will allow us to leverage complementary technology and engineering resources to provide our customers with expanded solutions in connectivity and content," said Christine King, president and CEO of SMSC. "We plan to focus our resources on the areas of highest return and believe that our respective sales and supply chain relationships will help create a platform to grow our businesses. We expect the acquisition will be accretive to non-GAAP EPS immediately upon close. In addition, we expect to capture significant operating efficiencies that will position us to increase earnings growth. SMSC's larger scale should position us to increase our R&D productivity and drive profitability and shareholder value."

The acquisition will see Conexant's imaging, audio, embedded modem and video products combined with SMSC's mixed signal connectivity portfolio targeting the computing, consumer, industrial, and automotive markets. SMSC predicts the acquisition will produce a combined trailing 12-month revenue of approximately $632 million. It also believes it can find annualized pre-tax cost synergies of $8 million to $10 million by the end of SMSC's fourth quarter of fiscal 2012.

Sailesh Chittipeddi, currently president and COO at Conexant, will join SMSC as executive vice president, reporting to King. Chittipeddi's responsibilities will include all product lines and global marketing and engineering functions for SMSC.

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