Transwitch Corp · OTC:TXCCQ
Transwitch — Centillium Communications — Merger or Acquisition (July 2008)
20 slides from Transwitch's merger presentation, Jul 14, 2008
Slide 1: Creating a New Global Leader in Semiconductor Solutions
Filed by TranSwitch Corporation Pursuant to Rule 425 under the Securities Act of 1933 and deemed Filed pursuant to Rule 14a-12 of The Securities Exchange Act of 1934 Subject Company: Centillium Communications, Inc. Commission File No.: 000-30649 Creating a New Global Leader in Semiconductor Solution
Slide 2: Forward-looking statements
Information set forth in this communication contains forward-looking statements, which involve a number of risks and uncertainties. Such forward-looking statements include, but are not limited to, statements about the timing of the completion of the transaction, the anticipated benefits of the trans
Slide 3: Important Information for Investors and Stockholders
Important Information for Investors and Stockholders TranSwitch expects to file a SEC Registration Statement on Form S-4, and TranSwitch and Centillium will file a proxy statement/prospectus with the SEC, in connection with the proposed merger. TRANSWITCH AND CENTILLIUM URGE INVESTORS AND STOCKHOLDE
Slide 4: A Winning Combination that Creates a New Global Communications IC Leader
A Winning Combination that Creates a New Global Communications IC Leader! • Increased Scale • $10.5 Million of Identified Synergies • Improved Profitability and Operating Leverage • Strong Position in High Growth Segments: Carrier Ethernet, Broadband Access, VoIP and PON • Major Beneficiary of High
Slide 5: Excellent Strategic Fit!
Excellent Strategic Fit! • “Right sized” relative to each other • Both are in high-growth markets • Complementary technology and product lines • Complementary and overlapping customer bases 5
Slide 6: Two Comparable Sized Companies…
Two Comparable Sized Companies… Centillium is “just the right size” • Large enough to provide meaningful scale • But small enough to be easily integrated (in millions) Balance Sheet (1) Total Assets $62.9 $49.9 Cash (2) 30.8 39.9 Debt 25.0 1.3 Last Quarter, Annualized (1) (3) Revenue $30.1 $22.5 (3)
Slide 7: … with Complementary Customer Bases
… with Complementary Customer Bases ... The two companies have overlapping customer bases Customer Universe: Excellent Strategic Fit 7
Slide 8: … and Complementary Product Lines
… and Complementary Product Lines … • The companies have complementary product lines with no overlap • Opportunity for $10.5 million synergy in COGS, R&D, G&A, Marketing and Sales Non-Telecom Broadband 4% Transport Non-Telecom Carrier Ethernet Access 0% Carrier Ethernet 0% 8% FTTP 39% Broadband Acce
Slide 9: … Focused on High Growth Markets
… Focused on High Growth Markets VoIP FTTP 90 1000 Infrastructure CPE 80 900 800 VoIP Port Shipments 70 FTTP Households 700 60 Connected 600 (Worldwide) 50 (Worldwide) 500 40 400 30 300 20 200 10 100 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 Source: In-Stat, December 2006
Slide 10: Transaction Overview
Transaction Overview • TranSwitch will purchase Centillium in a stock and cash transaction valued at $42.8 million at the time of Transaction announcement • $15 million cash • 25 million shares of TranSwitch stock Consideration • TranSwitch will have a net increase in cash of ~ $8 million after all
Slide 11: A Highly Accretive Transaction
A Highly Accretive Transaction • Identified cost synergies of $10.5 million in 2009 • Transaction accretive within one quarter of closing • Cross-selling opportunities provide additional upside • Integration risk is low, and can easily be mitigated 11
Slide 12: Current Analyst Estimate for Centillium
Current Analyst Estimate for Centillium Most recent analyst estimate for Centillium Michael Coady (B. Riley & Co., May 13, 2008) $ $ $ $ $ $ $ $ Centillium was forecast to lose $3.3 million on revenues of $34.8 million 12
Slide 13: Pro Forma Centillium Post Transaction
Pro Forma Centillium Post Transaction *Revenue and expense estimate for Centillium Michael Coady (B. Riley & Co., May 13, 2008) * $ $ $ $ $ $ $ $ Synergy – Cost Reductions 2,476 2,551 2,729 2,800 10,556 Operating Income $ 1,134 $ 1,513 $ 2,044 $ 2,517 $7,208 after Synergy (1) (1) Excludes restructur
Slide 14: Deal Synergies
Deal Synergies • Anticipated immediate realization of $10.5 million expense reductions in 2009 by: • Eliminating duplicative public company expenses (audit and legal fees, board compensation, Sarbanes-Oxley compliance) • Reduction of facilities and occupancy costs • Canceling duplicative software to
Slide 15: Attractive for TranSwitch …
Attractive for TranSwitch … • Industry leading VoIP and PON products added to portfolio • Atlanta: Internet Telephony’s 2005 Product of the Year award analogZONE’s 2005 Best VoIP Product of the Year • Entropia III-C: Internet Telephony’s 2007 Product of the Year Award • Mustang: Designed into two ke
Slide 16: Example: Centillium is Well Positioned in Japan
Example: Centillium is Well Positioned in Japan • Centillium products will be at the heart of a massive $47 billion infrastructure upgrade in Japan • Over 20 million FTTH subscribers are targeted by 2010 • The Mustang chip will be at the heart of the OKI platforms that are being deployed • Already s
Slide 17: Also Very Attractive for Centillium …
Also Very Attractive for Centillium … • Immediate and significant merger premium • Equity upside in a larger, stronger combined company • Significant exposure to major funded deployments worldwide • UK’s massive network infrastructure project with design wins at Fujitsu, ADVA and Ericsson • China Te
Slide 18: Example: TranSwitch is Well Positioned in the UK
Example: TranSwitch is Well Positioned in the UK • TranSwitch products will be at the heart of a massive $20 billion infrastructure project in the UK • Over 30 million broadband and voice lines are targeted for upgrade by 2012 • Etherphast-48, VTXP-48, VTXP-12, OED-155, Envoy-2GE, OED-155 and PHAST-
Slide 19: A Low Risk Transaction …
A Low Risk Transaction … • Integration risk is low, because TranSwitch and Centillium have many elements in common: • High overlap in major customers • Same technology and major suppliers • Business processes are very similar and well understood • Similar corporate culture • Centillium CEO to join T
Slide 20: Summary
Summary • This is a very positive transaction for both companies! • Combination creates a new global leader in Communications Semiconductors • $10.5 million of expense reduction synergies for 2009 have already been identified • The transaction is accretive within one quarter of closing • The combine
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