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TI to buy Amati for $395M
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November 19, 1997: 1:27 p.m. ET
Amati's deal with Westell terminated; Westell to get break-up fee, alliances
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NEW YORK (CNNfn) - Texas Instruments Inc. has caused a glitch in Westell Technologies Inc.'s expansion plans by agreeing to acquire its strategic partner, Amati Communications Corp.
Amati, a San Jose, Calif.-based provider of interconnection products with big-name clients such as IBM Corp., struck a deal with industry rival, Westell of Aurora, Ill., on Oct. 1. Westell proposed to acquire Amati for $394 million, or nearly $20 a share in stock.
Amati continued to shop around for the best price and found Texas Instruments. TI said Wednesday it will acquire Amati for $20 a share in cash.
During an interview with CNNfn, Westell said it will not revise its offer and is prepared to accept its $14.8 million break-up fee.
"Westell was made aware" of Amati's negotiations with TI, said Stephen Hawrysz, Westell's chief financial officer.
"At this point, based upon the announcements out there, we're prepared to walk away," Hawrysz said.
Concurrently, TI said it will enter into a strategic alliance with Westell that will accelerate the use of TI's technologies into Westell's digital subscriber line systems. The arrangement is contingent on the consummation of TI's acquisition of Amati.
"The strategic alliance continues to put us in the middle of that. We'll have access to the solutions that TI is developing. We believe it's definitely a win-win," Hawrysz said.
In a conference call to reporters, Gary Seamans, chairman and chief executive officer of Westell, said the alliance is proof that ADSL technology will be a real force in the communications industry.
"This is a strong validation of the DSL industry. It was clear to us as we were discussing with TI the opportunity for a strategic alliance that [we both] share the vision this will be a huge market," Seamans said.
Seamans said TI would be free to sell its ADSL solutions to companies other than Westell. From a technology standpoint, He also said the best thing about the alliance is that it will accelerate ADSL's journey toward becoming a mass-market technology.
He said the overall goal is for the companies involved is to drive the standards for ADSL and offer lower-priced solutions than competitors.
"If you're going to get a mass market, you need to have a broad, distributable solution. One of the things we want to do is help this market move sooner and bigger by bringing standards-based solutions and help pioneer the standards.
"You're not going to be a big winner in this business with proprietary solutions. It is our desire to be the first to market with those standards-setting systems and to have a very low-cost position in our products so we can compete intensively," Seamans said.
TI said it expects to take a one-time charge in the fourth quarter for in-process research and development. Amati will become a wholly-owned subsidiary reporting to the semiconductor group and will continue to operate from its facilities in San Jose, Calif.
Subject to satisfaction of certain conditions, TI will begin the all-cash tender offer Nov. 25. It is scheduled to expire at midnight EST, Dec. 23, unless extended.
The boards of both companies have unanimously approved the acquisition, and Amati's board has recommended that stockholders accept TI's all-cash tender offer.
The acquisition is contingent on the tender of a majority of Amati's outstanding common stock on a fully-diluted basis, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary requirements.
-- by staff writers Robert Liu and Cyrus Afzali
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