Microsemi Formally Commences Offers to Acquire All Outstanding Shares and Debentures of Zarlink

August 18, 2011 by Jeff Shepard

Microsemi Corp. announced that 0916753 B.C. ULC (the "Offeror"), an indirect wholly-owned subsidiary of Microsemi Corp. ("Microsemi"), has formally commenced its offers (the "Offers") to acquire all of the outstanding common shares, together with associated rights (the "SRP Rights") outstanding under the shareholder rights plan of Zarlink Semiconductor Inc., and all of the outstanding 6% unsecured, subordinated convertible debentures maturing on September 30, 2012 of Zarlink. The Offeror will deliver its Offers and take-over bid circular (together, the "Circular") to Zarlink’s principal office and file the Circular with the Canadian securities regulators and the U.S. Securities and Exchange Commission. The Circular will also be sent to Zarlink’s shareholders and debentureholders.

Pursuant to the Offers, shareholders of Zarlink will be entitled to receive CAD $3.35 for each common share validly deposited and debentureholders of Zarlink will be entitled to receive CAD $1,367.35 per CAD $1,000.00 principal amount of the convertible debentures validly deposited plus accrued and unpaid interest to the date such debentures are taken up.

Microsemi says the Offers represent a 40% premium over the closing price of Zarlink’s common shares on the TSX on July 19, 2011, the last trading day prior to the announcement of Microsemi’s proposal to acquire the common shares, and a 24% premium over the closing price of the debentures of Zarlink on the Toronto Stock Exchange (TSX) on the same day. The Offers are also said to represent a premium of 43% and 24%, respectively, over the average trading price of the common shares and debentures on the TSX for the 20-day trading period ending on that date.

"We are committed to building and strengthening Zarlink’s business, and believe our offers provide a superior outcome for Zarlink’s shareholders, debentureholders, employees, customers and the local economy," said James J. Peterson, Microsemi’s President and Chief Executive Officer. "We believe this proposed acquisition provides considerable growth opportunities, and greatly benefits the security holders of both companies."

"We are disappointed by Zarlink’s Board of Directors’ insistence on placing onerous restrictions on Microsemi that would have prevented us from presenting our attractive offers to Zarlink’s shareholders and debentureholders," added Peterson. "Under these circumstances, and in the absence of a more attractive alternative, Microsemi is compelled to take its offer directly to shareholders. Zarlink shareholders will receive a substantial premium, in cash, and without execution or macroeconomic risk."

Zarlink responded by advising its shareholders and debenture holders not to take any action concerning the Microsemi offers until they have received further communications from the Zarlink Board. The Zarlink Board will be issuing a Directors’ Circular in accordance with applicable securities laws which will contain information for shareholders and debentureholders, including the Board’s recommendation as to the action in response to the Microsemi offer that it believes is in the best interest of stakeholders. The Directors’ Circular will also be filed on SEDAR with Canadian securities regulators and on EDGAR with the U.S. Securities and Exchange Commission.

Zarlink noted Microsemi’s statements in its press release and states that it wished to clarify that it is Microsemi that has chosen not to participate in Zarlink’s strategic review process. Zarlink stated that it is disappointed that, despite its repeated invitations, Microsemi has declined to participate in Zarlink’s strategic review process on reasonable terms that favour the best outcome for Zarlink and its stakeholders.

The Zarlink Board has deferred the "Separation Time" that would otherwise have occurred as a consequence of the Microsemi offers until a later date to be determined by the Board. The Rights will not be exercisable, nor will certificates representing the Rights be issued, unless and until the "Separation Time" occurs. In spite of the deferral of the Separation Time, the Shareholder Rights Plan remains in full force and effect.