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Trident Microsystems, Inc. Message Board

  • latlong6748 latlong6748 Jan 6, 2010 12:05 AM Flag

    DON'T GET YOURSELVES IN A TIZZY

    I am surprised that you people go to Trident's website and say you can't find any details on NXP.

    YOU DIDN'T LOOK VERY HARD! It's all there.

    Now go and read the proxy statement of Dec 18 and understand what it says in plain English. It is not hard to understand.

    All this talk about share dilution is BS. READ.

    In a nutshell NXP pays Trident approx. 30 million dollars for 6,666,667 newly issued shares which is equivalent to 60% of Trident's shares outstanding on closing date.

    1. NXP ---> 30 million dollars to Trident

    2. NXP <--- 6,666,667 newly issued shares at a price of $4.50/share equal to 60% of Tridents total common shares outstanding on closing date. (6,666,667 X 4.50 = 30 mil) NXP will hold 60% of total common of Trident and paid 30 mil to Trident for them.
    CERTAINLY NO SHARE DILUTION.

    3. NXP <--- 4 shares of newly created Series B Preferred Stock.

    In exhange NXP has certain limited voting rights and Trident gains selected assets and liabilities of NXP's television systems and set-top box business lines separated from NXP before closing. NXP will have certain non-competitive and non-solicitation covenants for a period of 3 years.

    There you have it. Trident is a screaming buy and can go forward making you even more money to increase share value.

    Think of it this way. Deal is beneficial to both parties and NXP is investing in Trident's future. It share will be worth a lot more.

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    • Correction - some key words and paragraphs left out of previous post.

      -------------------------------------------------------------

      I am surprised that you people go to Trident's website and say you can't find any details on NXP.

      YOU DIDN'T LOOK VERY HARD! It's all there.

      Now go and read the proxy statement of Dec 18 and understand what it says in plain English. It is not hard to understand.

      All this talk about share dilution is BS. READ.

      In a Nutshell:

      1. NXP ---> 30 million dollars to Trident

      2. NXP <--- 6,666,667 newly issued shares at a price of $4.50/share equal to the Cash Payment of 30 million and a portion of the Total Transaction Shares. (6,666,667 X 4.50 = 30 mil)

      3. NXP <--- 99,161,723 (approx.) newly issued shares for purchase of Transferred Newcos and the Direct Transfer Assets. (NXP is selling assets and receiving shares) CERTAINLY NOT A SHARE DILUTION since Trident is receiving something in return)

      4. NXP <--- 4 shares of newly created Series B Preferred Stock.

      In exhange NXP has certain limited voting rights and Trident gains selected assets and liabilities of NXP's television systems and set-top box business lines separated from NXP before closing. NXP will have certain non-competitive and non-solicitation covenants for a period of 3 years.

      There you have it. Trident is a screaming buy and can go forward making you even more money to increase share value.

      Think of it this way. Deal is beneficial to both parties and NXP is investing in Trident's future. It's shares will be worth a lot more.

      I should proof read before I post.

      • 1 Reply to latlong6748
      • latlong wrote:

        >> All this talk about share dilution is BS.... CERTAINLY NOT A SHARE DILUTION since Trident is receiving something in return [for the newly issued shares] <<

        That's like saying "I paid $30,000 for a new car, but it didn't cost me anything because I got a new car in return for the $30,000."

        When you buy the car, your driveway will have a new car in it but your bank balance will be $30,000 lower. This doesn't necessarily mean that it was a bad idea to buy the car. It just means that you and the car dealer are exchanging assets in a transaction that each deems advantageous to himself. You'd rather have a new car than have $30,000 sitting in your bank account. The dealer would rather have $30,000 in his bank account than have the car sitting in his showroom. But that still does not mean that your new car didn't cost you anything. It cost you $30,000.

        By the same token, as I've repeated ad nauseam on this message board, the number of Trident shares outstanding on the day before the merger closes (assuming it closes) will be 70 M shares. The number of shares outstanding on the day after the merger closes will be 175 M shares. That's what's called massive dilution.

        This doesn't necessarily mean that the NXP merger will be a bad deal, any more than paying $30,000 for a car means that you got a bad deal. It all depends on what you're getting for your money (in the case of the car) or your shares (in the case of the NXP deal). It means that if you're a Trident shareholder you'll want to form an opinion as to whether the merger is worth the dilution. It also means that if you're performing any per-share calculations (cash per share, future earnings per share, etc.) you'll want to use the 175 M figure rather than the 70 M figure in your calculations. By the same token, if you're going to pay $30,000 for a car, you'll probably want to convince yourself that you're getting a good car for your money before you close the deal. And you'll need to plan your future budget with the understanding that your bank account will have $30,000 less in it.

        The bottom line is that if you own, say, 700,000 shares of Trident stock you currently own 1% of the company. The day after the NXP deal closes, you'll only own 0.4% of the company. So you'll want to know that your partial loss of ownership will be more than offset by the increased earning power of the post-merger company. I think there's a pretty good chance that the NXP assets being acquired by Trident will turn out to be worth the massive dilution involved in the deal, but it's by no means crystal-clear that such will be the case. To more accurately evaluate this deal, an analyst would need to do some pretty rigorous research. I'm still doing it.

        I myself voted in favor of the proposed NXP deal, and I think that there's a pretty good chance that it will be beneficial to shareholders in the long run. But to say that the deal is "CERTAINLY NOT A SHARE DILUTION" (in latlong's words) is simply ludicrous. Any time a company issues new shares and sells them to someone, it is, by definition, dilution.

    • and this is a problem, NXP is easily 20x bigger than TRID; so why this sweet deal for a minor USA electronics firm that looked like it would be better off closing its doors?

    • >>>Anyone care to answer that? Why is NXP paying a huge amount to take over (eventually) TRID? <<<

      NOBODADDY to the rescue! But I must warn you, Demflyn, some of what I say may actually be true.

      Short answer: NXP got its nuts caught in a vice and they had to do whatever it took to lower expenses.

      Do you remember a couple of years back when Private Equity was king of the roost and buying up everything in sight. Well, a consortium of PE firms bought NXP for about $10 billion at THE HEIGHT OF THE PE-going-private CRAZE. They financed this debt by selling bonds and now the company has about $5 billion in debt to service. Then times got tough, unit volumes went down, and price slashing began on TVs/STBs and everything else NXP sells. Unfortunately, the R&D requirements remained the same. They had to get rid of the TV/STB because it had fairly high R&D expenditures.

      I am convinced that Trident got a smokin' deal. NXP is a very desperate seller. Sylvia is taking advantage of the busted bubble in private equity financing. A great company, NXP, has been driven to its knees and she picked up a handsome chunk of it.

      There may be other motives at work. Perhaps NXP is considering a merger with another company but the TV/STB division didn't fit in. Please look at this article and the reader comments. It painfully describes the awful mess NXP is in:

      http://www.electronicsweekly.com/blogs/david-manners-semiconductor-blog/2009/01/private-equity-ruins-nxp.html

      And let me say one more thing. Trident executives have awarded themselves options recently but the NXP executives who will be coming over can't receive their options until the deal is finalized. It would be looked upon as an unfriendly gesture if TRID did anything to lift the stock price before the NXP execs get theirs. But once the merger happens, and everyone is set up with options THEN LET THE PUMP BEGIN!