Monday, March 22, 2010

Intersil to Acquire Techwell

Intersil Corporation (NASDAQ: ISIL) and Techwell, Inc. (NASDAQ: TWLL) announced today they have entered into a definitive agreement for Intersil to acquire Techwell through a cash tender offer at $18.50 per share. Net of Techwell's cash and equivalents, the transaction values Techwell at approximately $370 million.

Techwell, with over 200 employees in the U.S., China, Japan, South Korea and Taiwan, is a fabless semiconductor company that designs and sells mixed signal video solutions for the security surveillance and automotive infotainment markets. Techwell's products enable the conversion of analog video signals to digital form and perform advanced digital video processing to facilitate the display, storage and transport of video content. Major applications using Techwell products include industrial DVRs, networked video recorders, multiplexers, as well as automotive front consoles, rearview mirrors and rear seat LCD displays.

"Techwell's team and products will expand our leadership in two high-growth industrial markets," said Dave Bell, Intersil's President and Chief Executive Officer. "The addition of Techwell's mixed signal video products will help our customers build solutions that improve performance, reduce overall cost and shorten time-to-market. In addition, the acquisition will significantly increase our overall industrial business, which will become our largest end market at approximately 31% of revenue," continued Mr. Bell.

"We are very excited to join the Intersil family," said Hiro Kozato, Techwell's President and Chief Executive Officer. "This combination will help us deliver a much broader product offering in Techwell's end markets. Intersil's customer relationships will create numerous new opportunities for the combined company," said Mr. Kozato.

The acquisition is expected to be accretive to Intersil's 2010 earnings, excluding one-time costs and other acquisition-related charges.

Tender Offer and Closing
Under the terms of the agreement, Intersil will commence a cash tender offer to acquire Techwell's outstanding shares of common stock at $18.50 per share. Terms of the agreement were unanimously approved by Techwell's board of directors, and Techwell's board has recommended that Techwell shareholders tender their shares into the offer. Techwell's directors, entities affiliated with Technology Crossover Ventures, and certain executive officers of Techwell (in total representing approximately 23% of the outstanding shares) have already agreed to tender their shares into the offer.

Intersil expects to finance the acquisition by issuing debt; however, the transaction is not subject to a financing condition. Intersil has received a financing commitment of $390 million from Morgan Stanley Senior Funding, Inc. in connection with the acquisition. Morgan Stanley is acting as financial advisor to Intersil in connection with the acquisition, and Dechert LLP is acting as Intersil's legal counsel. Deutsche Bank Securities Inc. is acting as financial advisor to Techwell in connection with the acquisition, and Pillsbury, Winthrop, Shaw and Pittman is acting as Techwell's legal counsel.

The acquisition is expected to close during Intersil's second quarter and is subject to customary regulatory approvals and the satisfaction of other transaction conditions including the tender of at least 50% of Techwell's outstanding shares.