Selected Excerpt from QLGC S-4
Ancor had 4 competing suitors. Any guesses as to who companies A,B,C, & D were? Company A's interest dates back to November 1999. QLGC's overture commenced in March.
Looks like Ancor picked the best offer for the company and the shareholders. Thanks guys.
BACKGROUND OF THE MERGER
H.K. Desai, the chairman of the board and chief executive officer of QLogic
and Kenneth E. Hendrickson, the chairman of the board and chief executive
officer of Ancor, had previously worked together for a prior employer and had
from time to time discussed generally and informally various matters about the
industry in which QLogic and Ancor participate. During the last year, industry
participants have on occasion made informal suggestions to Ancor as to the
possibility of a consolidation. As described below, some of those suggestions
have resulted in further exploration of that possibility.
On November 16, 1999, Mr. Hendrickson met with the chief executive officer
of an industry participant, referred to in this section as company A, at a trade
show, who suggested that a merger of equals between the two companies be
considered. On November 30, Mr. Hendrickson, along with Calvin G. Nelson,
Ancor's president and chief operating officer, and Steven E. Snyder, its chief
financial officer, met with the chief executive officer and chief financial
officer of company A in Chicago, Illinois to further explore a combination of
the two businesses. Among other things, the question of the relative valuation
of the companies and management of the combined enterprise were discussed. The
two teams did not reach agreement on valuation or how to provide management
depth for the highly complex combined enterprise.
Following that meeting, Ancor engaged in discussions with an investment
banker concerning a possible combination with company A. The investment banker
made a presentation at a special meeting of the Ancor board of directors on
December 13, exploring the state of the industry, likely merger candidates and
details with respect to company A. At the end of the meeting, the board of
directors determined that a merger with company A would not be in the best
interests of Ancor's shareholders.
On January 17, 2000, Mr. Hendrickson met with the chief executive officer
of, and an outside investor in, company A. The question of relative valuation
and management depth was again discussed. At a regular board meeting on January
19, Mr. Hendrickson reported to the board the discussions of January 17.
On January 26, an executive of another industry participant, referred to in
this section as company B, contacted Mr. Hendrickson and suggested the
possibility of a merger.
On March 2, Mr. Desai telephoned Mr. Hendrickson and suggested that a
combination of Ancor and QLogic should be considered. On March 8, Ancor signed a
non-disclosure agreement prepared by QLogic dated March 6. Pursuant to that
agreement, the parties for a period of time exchanged information about their
respective businesses. There were numerous telephone conversations between
representatives of Ancor and QLogic concerning their respective businesses and
prospects.
On March 10, the chief executive officer of a third industry participant,
referred to in this section as company C, discussed the possibility of a merger
with Ancor, and Mr. Hendrickson suggested that there be a meeting of the
executives and technical management of the two companies. On March 27, there was
a meeting between representatives of company C and representatives of Ancor. Mr.
Hendrickson concluded that because of a substantial product overlap and cultural
differences between the two companies, a merger with company C was not in the
best interests of Ancor.
On March 29, there was a meeting between management teams of QLogic and
Ancor in San Jose, California, at which the benefits of a merger were discussed.
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During the week of March 30, Mr. Desai had telephone conversations with
certain members of the QLogic board of directors discussing the benefits and
risks of the merger. The consensus was that QLogic management should continue
discussions with Ancor.
On April 4, at a meeting between Mr. Hendrickson and Mr. Nelson of Ancor
and executives of company B, there was further discussion about a possible
merger, but Ancor's management determined that structural difficulties with
company B appeared to present insurmountable problems.
On April 5, at the request of the chief executive officer of company A, Mr.
Hendrickson had a dinner meeting with the chief operating officer of company A.
On April 12, a team of Ancor's executives, having been invited by a fourth
industry participant, referred to in this section as company D, made a
presentation to it concerning Ancor and the future of the industry. Company D
later scheduled a meeting with Ancor at Ancor's headquarters, but then canceled
the meeting.
On April 14, Mr. Hendrickson advised each board member by telephone of the
developments that had occurred over the past several weeks.
On April 17, Ancor engaged the services of Goldman Sachs in connection with
a possible merger of QLogic and Ancor.
On April 19, the Ancor board of directors met to hear a presentation by
Goldman Sachs concerning the industry and possible merger partners. The sense of
the board was that a merger with QLogic made the most strategic sense and
encouraged Ancor management to continue exploration of a merger with QLogic.
On April 20, Mr. Hendrickson met with the chief executive officer and chief
financial officer of company A in Chicago to again discuss a possible merger.
On April 21, the QLogic board of directors held a telephonic meeting with
members of QLogic management to discuss, among other things, the potential
strategic and financial benefits and risks of a merger with Ancor. Pursuant to
the discussions, the board authorized QLogic management to continue negotiations
with Ancor. After completion of the meeting, QLogic engaged SG Cowen Securities
Corporation as its financial advisor in connection with a possible merger of
QLogic and Ancor.
During the week of April 24, at the request of their respective clients,
the financial advisors for QLogic and Ancor had discussions regarding major
terms of a possible merger. On April 29 and April 30, there were discussions
between Mr. Desai and Mr. Hendrickson, and it appeared that progress was being
made toward a possible merger.
On May 1, the QLogic board of directors held a telephonic meeting with
members of QLogic management to discuss the status of negotiations. Topics
discussed, among others, included the potential strategic and financial benefits
and risks of a merger with Ancor, as well as the potential for Ancor to enter
into an exclusive period of negotiation. During this meeting, SG Cowen
Securities Corporation made a presentation regarding its preliminary financial
analysis in connection with the proposed merger. Subsequent to the meeting,
QLogic proposed to Ancor that it be granted an exclusive period to negotiate the
merger agreement and began preparation of a draft merger agreement.
On May 2, QLogic presented a draft of the merger agreement, an exclusivity
agreement and a detailed due diligence list to Ancor. After some discussion, and
after Ancor was satisfied that the proposed form of the merger agreement
provided a reasonable basis for negotiations, QLogic and Ancor entered into an
exclusivity agreement on May 3, providing QLogic with an exclusive period to
negotiate with Ancor toward a possible merger through May 9. QLogic
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continued its due diligence review of Ancor, and the parties began negotiations
of the merger agreement. Negotiations continued on May 4 and May 5.
On May 3, an investment banker for company A called a representative of
Goldman Sachs and proposed a merger of company A and Ancor. The investment
banker for company A indicated that the proposal would remain outstanding until
the end of the day on May 3. On the evening of May 3, a representative from
Goldman Sachs called the investment banker for company A and indicated that
Ancor could not move forward with company A at that time. The investment banker
for company A subsequently called a representative from Goldman Sachs indicating
that the proposal by company A had been withdrawn.
On the evening of May 4, the Ancor board of directors held a telephonic
meeting to consider the status of the negotiations. The board concluded that a
merger with QLogic made sound strategic sense and was more attractive than a
combination with company A. There was no interest in delaying a transaction with
QLogic in the hope that an offer from company A might emerge after the end of
the exclusive period. Mr. Hendrickson was directed to continue discussions with
QLogic.
At a special telephonic QLogic board of directors meeting on the morning of
May 6, the board of directors thoroughly reviewed the merger agreement and each
of the related documents with QLogic's legal counsel and received SG Cowen
Securities Corporation's financial presentation. The board thoroughly discussed
the merger with Ancor and authorized the execution of the merger agreement and
related documents. See "-- QLogic's reasons for the merger and recommendation of
the QLogic board of directors." The merger agreement and related documents were
signed on the evening of May 7, after the special Ancor board of directors
meeting referred to in the following paragraph.
At a special Ancor board of directors meeting on the evening of May 7, the
board of directors thoroughly reviewed the merger agreement and option agreement
with Ancor's legal counsel and received Goldman Sachs' financial presentation.
The board thoroughly discussed the merger with QLogic and authorized the
execution of the merger agreement and option agreement. See "-- Ancor's reasons
for the merger and board of directors recommendation." The merger agreement and
related documents were signed that evening.
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