Bidding War Breaks Out for Western Multiplex

If the public has learned anything about mergers and acquisitions in the past few months, it’s that they don’t necessarily all go
according to plans. In some case it’s federal regulators blocking the road (see NetRatings-Jupiter Media Metrix) and in other cases, it’s dissident shareholders (see Hewlett-Packard/Compaq.)

In the case of Sunnyvale, Calif.-based Western Multiplex, the obstacle came in the form of an unsolicited offer to buy the broadband wireless systems provider from DMC Stratex Networks Inc. . Western Multiplex had already agreed to a merger of equals with Proxim Inc. on Jan. 17.

San Jose, Calif.-based DMC Stratex proposed that Western Multiplex stockholders would receive 0.5215 shares of DMC Stratex common stock
for each share of Western Multiplex common stock, valuing the deal at $166.8 million — higher than Proxim’s offer.

Proxim had proposed converting each Proxim share into 1.8896 shares of Western Multiplex common stock. Because of recent declines in both share prices, the original deal is now valued at only $110 million. That deal was slated to be voted on March 26 and would have been sealed by the first quarter of this year.

Instead, DMC Stratex has made an aggressive play for Western Multiplex, which said that its board of directors will meet shortly to
review the proposal with its legal and financial advisors. And while it claims it was unsolicited, it did acknowledge that it was
involved in preliminary discussions with DMC Stratex this past summer. Those talks were not pursued as soon as discussions with Proxim heated up.

Proxim posted its position not long after Western Multiplex announced the new suitor this morning, saying that “although it is
respectful of the need for the Western Multiplex board to evaluate the unsolicited DMC Stratex proposal in a deliberative manner,
Proxim believes that the result of such evaluation should be the reaffirmation by Western Multiplex of its commitment to the
proposed Proxim/Western Multiplex merger.”

More specifically, Proxim said increases in license-free broadband wireless networking and adoption of standards-based wireless
LANs, particularly 802.11a and 802.11b, will make the combined firm a formidable wireless networking outfit to serve
integrated fixed wireless access and in-building distribution to enterprises, service providers and consumers.

As of this writing, Proxim did not respond to a question about whether or not the March 26 meeting to vote on the Proxim/Western
Multiplex merger was still scheduled.

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