SST to Be Acquired by Prophet Equity for $201 Million

SST (Silicon Storage Technology, Inc.) has entered into a definitive merger agreement to be acquired by Technology Resource Holdings, Inc., a Prophet Equity LP-controlled entity, as well as by members of SST’s management team.  

Prophet Equity LP will acquire all of the outstanding common stock of the company for $2.10 per share, except for shares held by Bing Yeh, SST’s Chairman and Chief Executive Officer, and Yaw Wen Hu, SST’s Executive Vice President and Chief Operating Officer and member of the Board of Directors, who have agreed to exchange all of their shares of SST common stock for shares of capital stock of the resulting privately held company. This price per share represents approximately a 13 percent premium to the closing price per share of SST’s stock on November 12, 2009.

SST’s Board of Directors, acting upon the recommendation of a Strategic Committee composed of all of SST’s independent directors, approved the agreement and resolved to recommend that the company’s shareholders adopt and approve the agreement.

The agreement contains a go-shop provision under which the Strategic Committee, with the assistance of its independent advisors, has the right to solicit proposals or offers with respect to, or that would reasonably be expected to lead to, an acquisition proposal from a third party for a 45 day period beginning on November 13, 2009. SST does not intend to disclose any developments with respect to this solicitation process unless or until the Strategic Committee has made a decision with respect to any proposals or offers it may receive.

"After an extensive review of strategic alternatives with company management and our financial advisors, we determined this all-cash sale of the company with a go-shop provision is in the best interests of the company’s shareholders," said Ronald Chwang, chairman of the Strategic Committee.

"We believe that this transaction provides the greatest likelihood of achieving the highest value for the company’s shareholders, and that this is also in the best interest of our customers, partners and employees. We believe the added flexibility of being a private company will help us to focus on delivering innovative memory and non-memory solutions to our customers and supporting their needs with the highest levels of service that they have come to expect," said Bing Yeh, co-Founder and Chief Executive Officer of SST.

The transaction, which is expected to close in the second quarter of 2010, is subject to regulatory approvals and approval of the agreement by:

• the holders of a majority of the company’s outstanding common stock represented and voting at a special meeting to be held to approve the transaction, excluding Bing Yeh and Yaw Wen Hu, and
• the holders of a majority of the company’s outstanding common stock, and other customary closing conditions.

Houlihan Lokey is serving as the exclusive financial advisor to the Strategic Committee of the Board of Directors in connection with the transaction.

Shearman & Sterling LLP is serving as legal advisor to the Strategic Committee of the Board of Directors in connection with the transaction.

Cooley Godward Kronish LLP is serving as legal advisor to the company in connection with the transaction.

Jackson Walker LLP is serving as legal advisor to Prophet Equity LP in connection with the transaction.