Anatomy of a screwing (warning, long and messy)
I just started reading the merger book, and you are right. CFMT shareholders are getting the shaft, big time.
On April 8, 2000, Mr. Mattson proposed to increase the consideration previously offered with respect to a merger of CFM and Mattson to approximately 4.85 million shares of Mattson common stock, with additional shares of Mattson common stock to be set aside to cover existing options to purchase shares of CFM common stock.
On April 18, 2000, Mattson and CFMT executed a binding no shop agreement which obligated the parties to execute an agreed upon merger agreement, or face substantial termination penalties.
On June 8 (during the 60 day period) Mattson became aware of change in control features in the CFM stock option plans (Note: My reading is that Mattson or their attorneys really screwed up by not being aware of this up front, since the option plans are public documents, and an acquirer should ALWAYS go through such things as option plans and employment agreements before signing an agreement to merge.
During June 13, 14, and 15, 2000, numerous telephone conversations took place between representatives of Mattson and CFM to clarify each party's position on valuation, stock options needed to retain key CFM employees, and the termination provisions under the merger agreement.(My read - Mattson thought they obligated themselves too much and CFMT management wanted a payoff - the 60 day period was fast approaching, and if Mattson backed out, they had a significant walk away payment to make).
On June 15, 2000, the Special Committee for Mergers and Acquisitions of the board of directors of CFM received an update regarding the discussions with Mattson. Mattson and CFM agreed to extend their binding no-shop agreement until June 30, 2000, and to continue negotiation of a definitive merger agreement.
On June 16, 2000, Mr. Mattson and Mr. Carolin spoke by telephone and agreed to adjusted consideration in the CFM merger based on approximately 4.1 million Mattson shares, plus the assumption of outstanding CFM options. (My read They took 750,000 shares from the public shareholders and gave it instead to management).
Here is how the Steag side of the deal worked:
On March 20, 2000, a meeting was held in Germany among Dr. Melchior, Dr. Betz, Dr. Luetke-Daldrup, Mr. Mattson and Mr. Seemann. A general outline of terms for a proposed transaction was discussed and issues were identified. The parties confirmed a valuation for the STEAG Semiconductor Division and preliminarily agreed on a price of 12 million newly issued Mattson shares. The parties also agreed to exchange more detailed due diligence information.
Between April 8 and April 10, 2000, Mr. Seemann and Mr. Savage communicated by telephone and email with Dr. Betz, Dr. Luetke-Daldrup, and Dr. Thaler regarding the negotiations between Mattson and CFM and the relative valuations of the companies. As a result of these discussions, STEAG agreed to accept a reduced number of Mattson shares for its semiconductor equipment business, subject to completion of a merger between Mattson and CFM, and resolution of the patent litigation between CFM and SES, at the same time.
Between June 21 and 23, 2000, Dr. Betz, Dr. Luetke-Daldrup, Dr. Thaler, Dr. Lockowandt, and other representatives of STEAG, met daily with Mr. Mattson, Mr. McDonald, Mr. David Dutton, Chief Operating Officer of Mattson, and Mr. Savage in Newark, California, along with representatives of Morgan Stanley, representatives of U.S. outside counsel to Mattson, and representatives of U.S. outside counsel to STEAG, to finalize the definitive agreements relating to the business combination. During these meetings, in light of the decreased price Mattson had agreed to pay for CFM, Mattson agreed to increase the consideration to be paid for the semiconductor equipment division of STEAG to 11,850,000 shares. (Steag agreed to a reduced number of shares, because it was important to them to have the CFM litigation settled on favorable terms. Once CFM management was paid off and the STEAG deal was not yet finalized, they were again in a position to demand more--and they got it. WHY did CFM management not insist on finalization of the Steag deal before they agreed to their side of the deal, especially when Steag had already agreed to accept less to have the deal done???)
The fairness opinions appear to have not factored in any value to CFM of the Steag litigation.
Management had options to acquire 1,782,000 CFM shares. They will receive options to acquire 1,430,740 shares of MTSN stock. Their exchange ratio is .8 shares of MTSN for each option of CFMT.
Public shareholders get .5223 shares of MTSN for each share of CFMT.
Any one wonder why they recommend we vote FOR the merger? |
