Filtronic Regulatory News (FTC)

12 Jun 2006 12:00

Filtronic PLC12 June 2006 Powerwave Technologies to Acquire THE Wireless INFRASTRUCTURE BUSINESS of FILTRONIC PLC SANTA ANA, Calif. and LONDON, England, June 12, 2006 - Powerwave Technologies,Inc. (NASDAQ: PWAV) and Filtronic plc (LSE: FTC) today announced that they havesigned a definitive agreement for Powerwave to acquire the majority ofFiltronic's Wireless Infrastructure division business for a combination of 20.7million newly issued shares of Powerwave common stock and $150 million in cash.The specific product lines included in this proposed transaction comprisetransmit/receive filters, integrated remote radio heads and power amplifierproducts, all for use in commercial wireless infrastructure base stationequipment (the "Wireless Infrastructure business"). The proposed acquisitiondoes not include point to point radio backhaul equipment, as well as Filtronic'sother divisions, of Compound Semiconductors and Defence Electronics. Ronald J. Buschur, President and Chief Executive Officer of Powerwave, stated: "Our proposed acquisition of the Wireless Infrastructure business of Filtronicwill further expand Powerwave's leadership position in the wirelessinfrastructure marketplace while deepening and strengthening our relationshipswith our customers. We will be able to significantly expand our transmit andreceive filter product lines, as well as complement our existing remote radiohead products and RF conditioning products. We are also excited about theopportunity to add one of the premier design and engineering resources in thewireless infrastructure industry along with Filtronic's excellent managementcapabilities to enhance our global position in both OEM and network operatorchannels. In addition, we believe that the increased purchasing power from thisacquisition will enable Powerwave to achieve significant cost synergies whilefurther leveraging our global manufacturing capabilities." Professor J. David Rhodes, Group Chief Executive Officer of Filtronic plc, said:"The board of directors believe that the divestiture of the WirelessInfrastructure business will provide significant, demonstrable value toFiltronic shareholders and that this combination with Powerwave will enhance itsposition as a leading provider in the commercial wireless infrastructure market. I am certain that the Filtronic Wireless Infrastructure business will continueto develop strongly within Powerwave to support customers and give its employeesexpanding opportunities. Part of the expected consideration is in Powerwaveshares. This will enable our shareholders to participate in Powerwave's growth,and indirectly benefit from the sustained growth we are currently experiencingin the Wireless Infrastructure market, where our order book on our largestproduct line has recently extended from two to twelve weeks despite increasingour production capacity." Transaction Overview The board of directors of both Powerwave and Filtronic have approved theacquisition. The transaction is subject to the approval of Filtronic'sshareholders, as well as customary closing conditions and certain regulatoryapprovals. Under the terms of the acquisition, Powerwave will issue 20.7 millionshares of Powerwave common stock and pay $150 million in cash to Filtronic.Powerwave and Filtronic expect the closing of the transaction to occur in thethird quarter of calendar 2006. Immediately following the close, Filtronic willhave an equity interest in Powerwave of approximately 13% on a fully-dilutedbasis, assuming conversion of Powerwave's convertible subordinated notes. TheWireless Infrastructure business's gross assets as at May 31, 2005 were£101.1 million and in the year ended May 31, 2005, the businessgenerated Operating Profit of £18.1 million. This strategic acquisition will provide Powerwave with the leading position intransmit and receive filter products, as well as broaden Powerwave's RFconditioning and base station solutions product portfolio in addition to addingsignificant additional technology to its intellectual property portfolio.Filtronic's Wireless Infrastructure business had a total trailing 12-monthrevenue run rate for the period ending November 30, 2005 of approximately£180.5 million, or approximately $332.1 million based on an USD/GBPexchange rate of $1.84 on June 9, 2006. This revenue total includes sales ofthe point to point radio backhaul equipment products, which are not beingincluded in the proposed acquisition. These products accounted forapproximately £10 million of revenues during this period. Powerwave believes that the proposed acquisition creates additional economies ofscale for key commodity components that leverage Powerwave's existing supplychain efficiencies. Powerwave plans to integrate Filtronic's leading transmitand receive filter capabilities into its global base station solutions as wellas promote standardization of products and use of common design platforms.Powerwave believes that this integration will generate additional cost savingsdue to vertical integration. The Wireless Infrastructure business has worldclass engineering and design locations in the UK, US and Finland. From anoperations perspective, Powerwave plans to leverage its existing world classmanufacturing expertise along with Filtronic's Wireless Infrastructure low costmanufacturing locations in China and Hungary as well as additional manufacturingsupport in the North American market. Powerwave currently estimates that itwill easily achieve in excess of $10 million in annual cost savings followingintegration of the acquisition, coming from efficiencies in manufacturing,purchasing, research and development, and general and administrative overhead.Powerwave currently anticipates achieving these cost savings within the firstyear after completion of the proposed acquisition. The transaction is expected to be accretive without synergies to Powerwave'searnings per share in the first full quarter following the completion of theacquisition, excluding any acquisition related expenses. Powerwave believesthat combined revenues for calendar year 2007 will easily exceed $1.4 billion.Powerwave also currently estimates that the proposed acquisition will beaccretive to Powerwave's fiscal year 2007 earnings per share in the range of 8to 12 cents with synergies. Deutsche Bank Securities acted as sole financial advisor to Powerwave and JPMorgan Cazenove acted as sole financial advisor to Filtronic in relation to thetransaction. This press release does not constitute an offer to sell or thesolicitation of an offer to buy the securities discussed herein. Webcast Powerwave and Filtronic will be conducting a conference call to discuss theproposed acquisition on Monday, June 12, 2006 at 8:30 am Eastern Time (1:30 pmLondon Time). A simultaneous webcast and slide presentation of the conferencecall will also be provided. To participate in the conference call, please call+001 (617) 213-8064, confirmation code 12572089. To access this audio andvisual webcast, log onto the Powerwave Investor Relations web page atwww.powerwave.com and select the Powerwave Conference Call. The call will lastfor approximately one hour. A replay of the webcast will be available beginningapproximately two hours after completion of the initial webcast. Additionally,an audio playback of the conference call will be available approximately on hourafter completion of the call and will remain available until July 19, 2006 bycalling (617) 801-6888 and entering confirmation number 99215585. About Powerwave Technologies Powerwave Technologies, Inc., is a global supplier of end-to-end wirelesssolutions for wireless communications networks. Powerwave designs, manufacturesand markets antennas, boosters, combiners, filters, repeaters, multi-carrier RFpower amplifiers and tower-mounted amplifiers and advanced coverage solutions,all for use in cellular, PCS and 3G networks throughout the world. Corporateheadquarters are located at 1801 E. St. Andrew Place, Santa Ana, Calif. 92705.Telephone (714) 466-1000. For more information on Powerwave's advanced wirelesscoverage and capacity solutions, please call (888)-PWR-WAVE (797-9283) or visitour web site at www.powerwave.com. Powerwave, Powerwave Technologies and thePowerwave logo are registered trademarks of Powerwave Technologies, Inc. About Filtronic plc Filtronic plc is a world leader in the design and manufacture of a broad rangeof customised RF, microwave and millimeter wave components and subsystems, andin compound semiconductor components. The company's products are used inwireless communication infrastructure equipment, electronic defence systems,point-to-point communication systems and mobile telephone handsets. Thecompany's headquarters are located at The Waterfront, Salts Mill Road, Saltaire,Shipley, West Yorkshire BD18 3TT, United Kingdom. Telephone +44 (0) 1274 530622. FORWARD-LOOKING STATEMENTS This press release contains "forward-looking" statements including statementsregarding benefits of the proposed acquisition, integration plans, expectedsynergies and cost savings, anticipated future financial and operatingperformance and results, including estimates for future revenue, the timeschedule for closing the transaction, satisfaction of conditions to closing,accretion to per share earnings and expectations for Powerwave's products. Thesestatements are based on Powerwave's management's current expectations. There area number of risks and uncertainties that could cause actual results to differmaterially. For example, the parties may be unable to obtain the necessaryapprovals required for the acquisition, including regulatory approvals andapproval of Filtronic's shareholders. Problems may arise in successfullyintegrating the acquired business. The acquisition may involve unexpected costs.We may be unable to achieve cost-cutting synergies. Our businesses may suffer asa result of uncertainty surrounding the acquisition. Other potential risks anduncertainties include, but are not limited to: customer order cancellations ordeferrals; delays or cancellations of wireless network capacity expansions andbuildouts for 2G, 2.5G and 3G networks; we require continued success in thedesign of new products and such products must be manufacturable and of goodquality and reliability; our dependence on a limited number of customers for themajority of our revenues exposes us to potential reductions in revenue if suchcustomers cease purchasing products from us; our business requires continuedfavorable business conditions and growth in the wireless communications market.Powerwave also notes that its reported financial performance andperiod-to-period comparisons are not necessarily indicative of the results thatmay be expected in the future and Powerwave believes that such comparisonscannot be relied upon as indicators of future performance. Powerwave also notesthat the market price of its Common Stock has exhibited high levels ofvolatility and therefore may not be suitable for all investors. More detailedinformation on these and additional factors which could affect Powerwave'soperating and financial results are described in Powerwave's Form 10-Q for thequarterly period ended April 2, 2006 and its Form 10-K for the fiscal year endedJanuary 1, 2006, both of which are filed with the Securities and ExchangeCommission, and other risks detailed from time to time in the Company's reportsfiled with the Securities and Exchange Commission. Powerwave urges allinterested parties to read these reports to gain a better understanding of themany business and other risks that Powerwave faces. Additionally, Powerwaveundertakes no obligation to publicly release the results of any revisions tothese forward-looking statements which may be made to reflect events orcircumstances occurring after the date hereof or to reflect the occurrence ofunanticipated events. Powerwave Contact: Kevin Michaels(714) 466-1608Filtronic Contacts: Professor David Rhodes, Group CEO+44 (0) 1274 530622Charles Hindson, Group Finance Director+44 (0) 1274 231150Paul McManus, Parkgreen Communications+44 (0) 20 7786 9600 Deutsche Bank AG London (Deutsche Bank), which is authorised by Bundesanstaltfur Finanzdienstleistungsaufsicht (BaFin) and by the Financial ServicesAuthority; regulated by the Financial Services Authority for the conduct of UKbusiness, is acting exclusively for Powerwave Technologies, Inc and no-one elsein connection with the acquisition and will not be responsible to anyone otherthan Powerwave Technologies, Inc for providing the protections afforded toclients of Deutsche Bank nor for providing advice in relation to the to thecontents of this document or the acquisition. JPMorgan Cazenove Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively for Filtronicplc. JPMorgan Cazenove Limited is not acting for any other person in relationto the disposal and JPMorgan Cazenove Limited will not be responsible to anyperson other than Filtronic plc for providing the protections afforded toclients of JPMorgan Cazenove Limited or for providing advice in relation to thecontents of this document or the disposal. ### This information is provided by RNS The company news service from the London Stock Exchange