Filed by DMC Stratex Networks, Inc.
Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant
to Rule 14a-2 of the Securities Exchange Act of 1934
Subject Company: Western Multiplex Corporation
Commission File No. 000-30993
Investor Contact:
Laura Graves
DMC Stratex Networks, Inc.
Tel: 408-944-1817
Email: laura_graves@dmcwave.com
STRATEX NETWORKS CONFIRMS OFFER
TO ACQUIRE WESTERN MULTIPLEX
SAN JOSE, CA., February 28, 2002–DMC Stratex Networks, Inc. (NASDAQ: STXN), one of the world's foremost solutions providers for mobile applications and broadband wireless access, confirmed today that it has proposed a strategic merger with wireless equipment maker Western Multiplex Corporation (NASDAQ: WMUX). The offer is valued at $169.5 million, whereby shareholders of Western Multiplex would receive 0.5215 shares of Stratex Networks in exchange for each outstanding share of Western Multiplex.
Commenting on today's development, Charles D. Kissner, Chairman and CEO of Stratex Networks said, "We initiated this highly compelling offer to Western Multiplex and look forward to a prompt response from their Board of Directors in order to commence merger discussions as soon as possible. We believe our offer provides Western Multiplex's stockholders with demonstrably superior immediate value to the pending transaction with Proxim. It also offers vastly superior long-term value by combining two world-class leaders in the wireless infrastructure industry."
Based upon the closing price of both companies on Wednesday, February 27, 2002, the bid values Western Multiplex at $2.86 per share, which represents a 36% premium over Western Multiplex's closing price of $2.11.
Kissner continued, "The combined company will be uniquely attractive, in terms of mix of businesses, distribution channels and management talent. It is our strong belief that the merger of our two companies would be highly beneficial to both stockholder groups." The offer letter, which Stratex Networks decided to release in response to the decision by Western Multiplex to announce the offer, is attached to this press release.
This press release contains statements that qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including statements made by DMC Stratex Networks, Inc. regarding Western Multiplex, strategic benefits of the transaction, anticipated market growth, and customer and business partners' reactions. These forward-looking statements are based on current expectations and Stratex Networks assumes no obligation to update this information. In addition, the events described in these forward-looking statements may not actually arise. Stratex Networks' actual results could differ materially from those described in this press release as a result of certain risk factors, including an unanticipated change in customer demand, the ability of customers to pay for equipment purchased, the continued availability of financing for network expansions, the ability of Stratex Networks and its suppliers to respond to changes made by customers in their orders and competition in the microwave and access business, in general. For a further discussion of such factors, as well as our business in general, see the information provided under the heading "Factors That May Affect Future Financial Results" in DMC Stratex Networks, Inc.'s Quarterly Report on Form 10-Q for the quarter ended December 31, 2001, filed with the Securities and Exchange Commission on February 13, 2001.
This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares of Western Multiplex Corporation. Western Multiplex Corporation stockholders are urged to read the relevant exchange offer documents when they become available because they will contain important information that stockholders should consider before making any decision regarding tendering their shares. At the time the offer, if any, is commenced, DMC Stratex Networks, Inc. will file exchange offer materials with the U.S. Securities and Exchange Commission and Western Multiplex Corporation will file a solicitation/recommendation statement with respect to the offer. The exchange offer materials (including an offer to purchase, a related letter of transmittal and other offer documents) and the solicitation/recommendation statement will contain important information, which should be read carefully before any decision is made with respect to the offer. The offer to purchase, the related letter of transmittal and certain other offer documents, as well as the solicitation/recommendation statement, will be made available to all stockholders of
Western Multiplex Corporation at no expense to them. The exchange offer materials (including the offer to purchase, the related letter of transmittal and all other documents filed with the Commission) and the solicitation/recommendation statement will also be available for free at the Commission's website at www.sec.gov.
The following is being issued by DMC Stratex Networks, Inc.
Stratex Networks
Charles D. Kissner
Chairman & CEO
February 26, 2002
Mr. Jonathan Zakin
Chairman and Chief Executive Officer
Western Multiplex Corporation
1196 Borregas Avenue
Sunnyvale, California 94089
Dear Jonathan:
DMC Stratex Networks, Inc. ("DMC") has been observing closely the market's reaction to the surprising announcement of your intention to acquire Proxim, Inc. ("Proxim"). We believe that the exceptionally steep price drop experienced in your common stock following the announcement of your transaction with Proxim reflects serious investor concerns with the proposed transaction.
As you are aware, several months ago our respective management teams held extensive discussions in connection with a potential combination of our companies. Although we were not able to reach an agreement at that time on the terms of a combination, I believe both management teams viewed a combination of our businesses as strategically compelling.
I am particularly disappointed that we were not informed that Western Multiplex Corporation ("Western Multiplex") was considering an acquisition of Proxim and were not provided the opportunity to continue our discussions prior to the announcement of that proposed transaction. Nevertheless, we are prepared to proceed with a strategic business combination of Western Multiplex with DMC on terms that would provide far greater value for Western Multiplex's stockholders than the pending transaction and therefore merits detailed and serious consideration by you and your advisors.
To that end, we propose to combine with Western Multiplex in a stock-for-stock transaction that would be tax-free to Western Multiplex's stockholders. Our proposal would involve an exchange of shares at an exchange ratio of 0.5215 DMC shares per Western Multiplex share. Based on February 26, 2002 closing prices, our proposal represents a 37.9% premium over Western Multiplex's current market price and a 60.3% premium based on our average share price over the last 30 days. This exchange ratio would remain constant and will result in Western Multiplex's stockholders owning approximately 28% of the combined company.
We believe a transaction between Western Multiplex and DMC would provide demonstrably superior short term and long term value to your stockholders by combining two world-class leaders in the wireless infrastructure industry. I also believe that the combination of our two companies represents a uniquely attractive opportunity to your management team and employees. We intend to honor existing financial arrangements for you and your employees, including the acceleration of unvested options to acquire shares in Western Multiplex's common stock, and look forward to exploring with you attractive opportunities for your senior management in the combined organization.
With a combined market capitalization of approximately $630 million, your stockholders will gain additional comfort from having a significantly enhanced path to liquidity compared to the transaction with Proxim. I also anticipate a Board seat in the combined company would be given to an individual designated by Western Multiplex. Lastly, DMC has made meaningful acquisitions in the past, and we are intimately familiar with the regulatory process required to consummate a transaction of this nature. We anticipate no significant issues or undue time delays.
As we previously discussed, we believe that a combination of our companies is compelling from a strategic perspective and creates a superior platform to continue strong growth. Our products, customers and channels are complementary. Combined, we will become one of the world's largest independent suppliers of wireless access products covering the licensed and unlicensed spectrum, and will be ideally positioned to capture opportunities both in the current downturn and the anticipated recovery later this year and beyond. We would like to highlight five areas of substantial benefits from our proposed transaction:
We believe that our proposal is substantially more attractive to your stockholders than your pending transaction. We believe that your stockholders will enthusiastically embrace our proposal once they learn of it. In light of the fiduciary duties of the directors of Western Multiplex to its stockholders, we believe that your Board of Directors has a legal duty to facilitate the receipt by its stockholders of our proposal in order that they may freely choose what we believe is a much more favorable transaction. Our proposal provides Western Multiplex's stockholders with an immediate and significant increase in economic value and a compelling long term opportunity to participate as a stockholder in a leading supplier to the wireless industry.
Given the extensive prior discussions and diligence review performed by our respective companies, our diligence requirements would be adjusted accordingly. We propose that (i) you provide us with copies of the same non-public information concerning Western Multiplex that was furnished to Proxim, including the Disclosure Letter to the agreement with Proxim and background information related to such disclosures, (ii) confirm that the Disclosure Letter remains accurate, and (iii) provide us the opportunity to perform confirmatory bring-down business due diligence and accounting and legal due diligence. In order to expedite the process, we have already prepared our Disclosure Letter to the Western Multiplex/Proxim agreement representations and warranties and are prepared to deliver that to you concurrently with your delivery of your Disclosure Letter.
We believe that time is of the essence and are prepared to move forward expeditiously by committing all necessary resources to promptly complete a transaction. In that regard, we have engaged CIBC World Markets and Morrison & Foerster LLP to advise us in this transaction. We are prepared immediately to enter into a confidentiality agreement, to perform our limited due diligence requirements described above, to enter into a merger agreement with you on the same terms as your agreement with Proxim (with the exception of certain provisions of Section 4.1 of such agreement), and to consummate the combination of our companies on generally the same time line as your proposed merger with Proxim.
The Board of DMC has unanimously approved this proposal and has unanimously authorized us to proceed. We look forward to meeting with you as soon as possible to discuss and negotiate our proposal in detail and to achieve prompt agreement. You can be assured that we will do everything in our power to see this transaction through to successful completion. We strongly prefer to consummate
this transaction on a mutually satisfactory, negotiated basis. Accordingly, we do not plan to disclose our proposal publicly at this time. We are prepared to meet immediately with you and your Board.
Sincerely,
Charles D. Kissner
cc: Members of the Board of Directors of Western Multiplex
After the acceptance, if any, of DMC Stratex Networks, Inc.'s proposal by Western Multiplex Corporation's board of directors, DMC Stratex Networks will file with the SEC a registration statement on Form S-4 that will include a proxy statement/prospectus that will be mailed to Stratex Networks and Western Multiplex stockholders. The registration statement and the proxy statement/prospectus will contain important information about Stratex Networks, Western Multiplex, the merger, and related matters. Investors and security holders are urged to read the registration statement and the proxy statement/prospectus when they become available because they will contain important information. Investors and security holders will be able to obtain free copies of these documents through the web site maintained by the U.S. Securities and Exchange Commission athttp://www.sec.gov. In addition to the registration statement and the proxy statement/prospectus, Stratex Networks and Western Multiplex file annual, quarterly, and special reports, proxy statements, and other information with the Securities and Exchange Commission. You may read and copy any reports, statements, and other information filed by Stratex Networks and Western Multiplex at the SEC public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the Commission's other public reference rooms in New York, New York, and Chicago, Illinois. Please call the Commission at 800/SEC-0330 for further information on public reference rooms. Stratex Networks' and Western Multiplex's filings with the Commission are also available to the public from commercial document-retrieval services and the web site maintained by the Commission at http://www.sec.gov. The registration statement and proxy statement/prospectus and these other documents may also be obtained for free from the parties.
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