The Board of Directors of AuthenTec, a provider of smart sensors and solutions, announced a statement in response to the proposal by UPEK to combine the businesses of AuthenTec and UPEK, and the nomination by UPEK for elections to replace the AuthenTec Board of Directors.
After careful consideration of the UPEK proposal, the Board of Directors determined that this transaction is not in the best interests of AuthenTec's stockholders.
The Board rejected the proposal on the basis of its inadequate financial terms and lack of confidence in UPEK's financial position. Furthermore, the failure of UPEK to provide any information to AuthenTec's stockholders on its financial performance, prospects or value, makes it impossible for the stockholders to evaluate UPEK's proposal.
The Board believed that the special dividend payment contemplated in UPEK's proposal would leave the combined company without the financial resources necessary to execute its strategic objectives without the capacity to extract potential synergies. AuthenTec's balance sheet and cash position represent important competitive advantages in the current economic environment. If affected, this special dividend would come solely from AuthenTec's cash, with no financing or cash provided by UPEK. Moreover, the Board believes that the 50-50 equity split proposed by UPEK overstates the value that UPEK would bring to the combined company, and that the proposal relating to contingent value rights is speculative and potentially of little value to AuthenTec stockholders.
The Board also noted that UPEK's unsolicited proposal followed within days of letter from AuthenTec to UPEK, informing UPEK of AuthenTec's claim that UPEK products infringe five AuthenTec patents.
The Board and management are committed to continuing to act in the best interests of AuthenTec's stockholders.