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March 4, 1999


By CBR Staff Writer

Philips Electronics NV’s advances toward high-performance chip maker VLSI Technology have taken a more hostile turn, with the company announcing late Thursday that it will take its $777m takeover proposal directly to the shareholders and commence a cash tender offer for all outstanding VLSI shares. The tender offer, which will run from today through April 1, is for the same $17 per share in cash that Philips had originally offered to VLSI’s board on February 26 and represents a 58% premium to VLSI’s closing price of $10.75 on the day prior to the offer.

News of the offer came after VLSI’s board had said earlier this week that it would consider it and hold a board meeting on March 23 to discuss the matter. That apparently wasn’t good enough for Philips, which had been demanding an answer by this weekend, and was seen by many as little more than a last-ditch attempt by VLSI to forestall a hostile takeover attempt.

Philips said Thursday that it continues to have the highest regard for VLSI and its employees and is encouraged by VLSI’s statement that its board has an open mind concerning the Philips offer. But, the company insisted, given the nature of the offer and its desire to quickly complete such a mutually beneficial transaction, it decided to take its offer directly to VLSI shareholders. Philips added that it remains hopeful that VLSI will decide to negotiate a transaction soon.

In addition, it will request that VLSI’s board remove the company’s shareholder rights plan and – if it doesn’t – will fight to replace the board members with its own nominees. The plan allows VLSI shareholders to buy shares at roughly half the market price if a third party acquires a 20% stake.

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