Filed by Sipex Corporation
Pursuant to Rule 425 Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: Sipex Corporation
Commission File No. 1-33403
This filing relates to the proposed merger of Exar Corporation, a Delaware corporation (“Exar”) and Sipex Corporation, a Delaware corporation (“Sipex”), pursuant to the terms of that certain Agreement and Plan of Merger, dated as of May 7, 2007, by and among Exar, Side Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Exar, and Sipex.
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Sipex TM
The Sipex Opportunity
May 2007
Ralph Schmitt
Disclaimer
Cautionary Statement Regarding Forward-Looking Statements
This document contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements contained in this document include statements about future financial and operating results; benefits of the transaction to customers, stockholders and employees; potential synergies and cost savings resulting from the transaction; the ability of the combined company to drive growth and expand customer and partner relationships and other statements regarding the proposed transaction. These statements are not guarantees of future performance, involve risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. For example, if Exar and Sipex do not each receive required stockholder approval or the parties fail to satisfy other conditions to closing, the transaction may not be consummated. Similarly, anticipated costs savings may not be achieved and projections as to whether, when and the extent to which the transaction will be accretive may not prove accurate. In any forward-looking statement in which Exar or Sipex expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: failure of the Exar and Sipex stockholders to approve the proposed merger; the challenges and costs of closing, integrating, restructuring and achieving anticipated synergies; the ability to retain key employees; and other economic, business, competitive, and/or regulatory factors affecting the businesses of Exar and Sipex generally, including those set forth in the filings of Exar and Sipex with the Securities and Exchange Commission, especially in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of their respective annual reports on Form 10-K and quarterly reports on Form 10-Q, their current reports on Form 8-K and other SEC filings. Exar and Sipex are under no obligation to (and expressly disclaim any such obligation to) update or alter their forward-looking statements whether as a result of new information, future events, or otherwise.
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Additional Information
Additional Information and Where You Can Find It
Exar will file a Registration Statement on Form S-4 containing a proxy statement/prospectus and other documents concerning the proposed merger transaction with the Securities and Exchange Commission (the “SEC”). Security holders are urged to read the proxy statement/prospectus when it becomes available and other relevant documents filed with the SEC because they will contain important information. Security holders may obtain a free copy of the proxy statement/prospectus (when it is available) and other documents filed by Exar and Sipex with the SEC at the SEC’s web site at http://www.sec.gov. The proxy statement/prospectus and other documents may also be obtained free of charge by contacting Exar Investor Relations by e-mail at investorrelations@Exar.com or by telephone at 1-510-668-7201or by contacting Sipex Investor Relations by e-mail at InvestorRelations@sipex.com or by telephone at 1-408-934-7586.
Exar and its executive officers and directors may be deemed to be participants in the solicitation of proxies from Exar’s stockholders with respect to the transactions contemplated by the merger agreement. Information regarding such executive officers and directors is included in Exar’s Proxy Statement for its 2006 Annual Meeting of Stockholders filed with the SEC on August 9, 2006, which is available free of charge at the SEC’s web site at http://www.sec.gov and from Exar Investor Relations which can be contacted by e-mail at investorrelations@Exar.com or by telephone at 1-510-668-7201. Certain executive officers and directors of Exar have interests in the transaction that may differ from the interests of Exar stockholders generally. These interests will be described in the proxy statement/prospectus when it becomes available.
Sipex and its executive officers and directors may be deemed to be participants in the solicitation of proxies from Sipex’s stockholders with respect to the transactions contemplated by the merger agreement. Information regarding such executive officers and directors is included in Sipex’s Proxy Statement for its 2006 Annual Meeting of Stockholders filed with the SEC on October 10, 2006, which is available free of charge at the SEC’s web site at http://www.sec.gov and from Sipex Investor Relations which can be contacted by e-mail at InvestorRelations@sipex.com or by telephone at 1-408-934-7586. Certain executive officers and directors of Sipex have interests in the transaction that may differ from the interests of Sipex stockholders generally. These interests will be described in the proxy statement/prospectus when it becomes available.
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40 Years of Analog Excellence
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Product Portfolio Power Management PWM Controllers PowerBlox Reg DC/DC Regulators LDO’s White LED Drivers Supervisors >200 Part Types Commodity to ASSP Interface 3V & 5V RS232 transceivers 3V & 5V RS485 Transceivers Multiprotocol Transceivers High Speed Quad Drivers High Speed Quad Receivers >150 Part Types Commodity to Proprietary Optical Storage Auto Power Control Photo Detector IC Laser Diode Driver >20 Part Types Custom and ASSP Solved by Sipex TM Company Confidential
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Recent Timeline - Investigation
Investigation Launched
Delisted from Nasdaq
R. Schmitt New CEO
Investigation Closed
4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07
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Recent Timeline – Financial Recovery
Bridge Financing Sold Buildings Delaware Lawsuits Settled Shareholder Lawsuits Settled $30M Convert Financing Restatement of 03, 04 & 05 Current on Financials New Board SEC Investigation Closed Nasdaq Relisting
4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07
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Recent Timeline – Operational Changes
4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07
Fab Closure
Announced
Silan Strategic Agreement
7 New Products
9 New Products
New Linear Regulator Potfolio
Fab Closed
Digital Power Announcement
Record ! 16 New Products
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On to Accelerating Shareholder Value !
Investigation Launched Delisted from Nasdaq R. Schmitt New CEO Investigation Closed Bridge Financing Sold Buildings Delaware Lawsuits Settled Shareholder Lawsuits Settled $30M Convert Financing Restatement of 03, 04 & 05 Current on Financials SEC Investigation Closed New Board Nasdaq Relisting
4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07
Fab Closure Announced Silan Strategic Agreement 7 New Products 9 New Products New Linear Regulator Potfolio Fab Closed Digital Power Announcement Record ! 16 New Products 10 New Products Exar Merger
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Restructuring Progress – Q1 Status
Fab Closed in Oct – Wafer Starts Moved to China
20% of Wafer Starts in Q1 From Silan in China
65% out of Episil in Taiwan
Inventory Flat on Declining Revenues
Market Inventory Correction in Q4 and Q1 Seasonality
Opex Reduced
$1M+/Qtr Realized in Q1
Optics in Harvest Mode
$1M/Qtr Revenue Impact
Margin Improvement
Standard Margin Up 4% to 32%
Lower Volume and Yield Drove GM to 26%
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Driving Towards Profitability
Q2 Backlog $2M+ Stronger Than Beginning of Q1
B:B Running at 1.2
Further Opex Reductions in Q2
Optical & Auditing/Legal Fees
More Pronounced Inventory Reduction
Greater Flow thru of Higher Cost CA Inventory
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Revenue by Product Line
$25 M $20 $15 $10 $5 $0 Q1’06 Q2’06 Q3’06 Q4’06 Q1’07 Q2’07 GUIDE
Optical Power Interface
Q207 Revenue Guidance $17.5 – $19M
4 – 12% Growth
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Target End Market Segments
Consumer
Portable
Display
STB/Multimedia
Industrial
Security
HVAC
Lighting Control
Motor Control
PC Modules
Networking
Voice Infrastructure
Data Infrastructure
Switch/Routers
Modems
LAN
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New Interface Product Explosion
9 new 5V RS485 Transceivers with ±15kV ESD, Enhanced Failsafe, Hotswap, 1/8th Unit Load
In production – SP3080
9 new 3V RS485 Transceivers with ±15kV ESD, Enhanced Failsafe, Hotswap, 1/8th Unit Load
In production – SP3070
Profibus™ transceiver for industrial applications
In production – SP1486
8 new 3V RS232 Transceivers with Auto On-Line Plus
6 are in production – SP3224-27, 3244/45
2 are sampling today – in production by Q2 2007 – SP3238/47
3V dual protocol with ±15kV ESD, configurable for RS232 or RS485
Samples today – in production by Q3 2007 – SP336
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Power Solutions to Differentiate
2005
2006
2007
2008
LDO
Vref
Buck Reg
Boost Reg
Supervisor
Charge Pump
PWM Controller
Digital Power
ASSP
Power Subsystems
GM 60%+
Standard Linear
GM 50%
GM 40%
China
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Move Towards ASSPs
Portables / Handsets
Integrated LED Backlight Driver and Camera Flash
Large Displays
LED Driver and DC/DC
Networking/Computing/Industrial
DC/DC
Industrial/Architectural Lighting
LED Driver
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Target End Market Segments
Industrial
Security
HVAC
Lighting Control
Motor Control
PC Modules
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Sipex
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Architectural LED Lighting
4 Switching Regulators
24VDC à LED Drive
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Sipex TM
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To Be Solved By Sipex – Color Accuracy
Issue: LED Light Consistency
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Sipex TM
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Target End Market Segments
Networking
Voice Infrastructure
Data Infrastructure
Switch/Routers
Modems
LAN
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Sipex TM
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The Value of PowerBloxTM
Integration
Lower Component Count
Internal synchronous FET
No need to specify FETs
Power Density
7X4mm DFN up to 12Amps
12Amps in 7cm2
8mohm FET in 12Amp device
>94% efficient
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PowerBlox Thermal Performance
Low Heat Dissipated From a 12 A Source
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Target End Market Segments
Consumer
Portable
Display
STB/Multimedia
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LED Lighting for Large Displays
20”
30”
40”
15
20
17-19W
23-24W
30-32W
25-27W
34-37W
40-46W
>50W
Edgelit B/L w/ WHT Side LED
Edgelit B/L w/ RGB Top LED
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Consumer Multimedia – DTV & STB
Buck Regulators SP7652 6A PowerBlox SP7650/52/53 3A PowerBlox SP7655 8A PowerBlox SP613x HV Input Controllers SP7662 12A PowerBlox LED Drivers SP6132 DCDC Controller SP7611-14 LED LowSide LED Dx SP7616 SmartTalk LED Dx RS232 Interface SP232/SP3232 5V/3V RS232 SP3223 3V RS232 LDOs SP6203/05 500mA LDOs SPX5205 Low Noise LDO SPX2930x 3A LDO SPX2950x 5A LDO SP294x NSC 2nd Source LDOs SPX1585/87 Fast Transient LDOs Buck Regulators SP6132/34/37 DC/DC Controllers SP6133/36 DC/DC Controllers SP2996 DDR Memory Power Chip USB Port Power SP2525A USB Power Reg SP2526A Dual USB Power Solved by SipexTM
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EXAR
Experience Our ConnectivityTM
Solved by SipexTM
STRATEGIC COMBINATION
May 2007
Transaction Overview
Structure
Combined company will maintain Exar name
Stock-for-stock exchange
0.6679 shares of Exar for every share of Sipex
Exar and Sipex stockholders to own 67.6% and 32.4%, respectively
Financial Impact
Pro forma revenues of ~$150M (last twelve months)
>$10M of synergies, on an annualized basis, by the second calendar quarter of 2008
Expected to be accretive to Non-GAAP earnings by the second calendar quarter of 2008
Combined cash balance of ~$367M
Leadership
Chairman: Richard L. Leza
Chief Executive Officer: Ralph Schmitt
Chief Financial Officer: J. Scott Kamsler
Governance
5 Board members from Exar, including Richard L. Leza
3 Board members from Sipex, including Ralph Schmitt
Timing
Announced May 2007
Shareholder vote and estimated closing in the third quarter of calendar year 2007
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Overview Of Merger Strategic Rationale Create Shareholder Value Additional Information
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Company Profiles
EXAR
Leading supplier of analog and mixed-signal silicon solutions for the serial communications, network transmission and storage markets
Year Founded: 1971 Headquarters: Fremont, CA Revenue: $69M Key Product Families Serial Communications Network Transmission Storage Interconnect Employees: 235 Sipex
Leading supplier of analog and mixed-signal silicon solutions for the power management, interface and optical storage markets
Year Founded: 1965 Headquarters: Milpitas, CA Revenue: $78M Key Product Families Power Management Interface
Optical Storage Employees: 270 Solved by Sipex TM
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Strategic Rationale
Leader in High Performance Analog and
System Level, Mixed-Signal Solutions
Expanded growth opportunities in the communications, consumer, industrial and storage markets
Increased scale and resource optimization for immediate cost synergies
Platform for consolidation in the high-value high performance analog and mixed-signal product space
Results driven leadership team
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Solved by SipexTM
Broader Product Portfolio EXAR Network Transmission Serial Communications Interface Power Management Sipex
Revenue: Approximate Contribution
20% 55% 25%
Growth Opportunity
15-20% 5-10% >30%
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Solved by
Sipex TM
Portfolio Expansion Through Acquisition
Digital Power
DC/DC
Battery Chg
SATA I/II PCI Express
USB
Multi-Protocol
Ethernet
Power Management
Interface
Network Transmission
Combined Enterprise
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Complementary Products & Technologies
Communications Computing Consumer Industrial
Technology Access Power Interface / UART Clock Phy Control
MPOS Mappers Framers SAS SONET/SDH to SAT AOC-192 T/E FC Programmable Skew Spread Spectrum ZDB
ISA & PCI Multi-channel I2C & SPI Low Voltage/ RS-232 Combo Low Power UARTS Wireless
Multiprotocol RS-232 USB RS-485 Buck Reg PowerBlox Charge Pumps Controllers Boost Reg
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IP/Competency Sharing for Maximum Return
Sipex Digital Power
Exar Digital Control Expertise
Next Generation Integration of PLLs
Exar UART Integration
Combination of Interface Standards & Multi-Protocol
Exar Sonet/SDH
Integration of Power Management
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Increased Customer Relevancy & Diversity
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Sipex TM
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End Market & Geographic Presence
Exar Business Units Sipex Business Units Network Transmission Serial
Communications Interface Power Management End Markets Industrial Consumer Communications Storage / Computing Market Penetration Americas Europe Asia Solved by Sipex TM
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Strengthens Global Reach
Exar
Sipex
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Scale to Expand Growth Opportunities
More competitive organization with enhanced growth prospects
Expanded array of products, customers and channels
Complementary products and technology capabilities
Strong balance sheet
Platform for consolidation
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Near-Term Synergies
Revenue expansion through cross-selling and focused channel partners
>$10M of cost savings, on an annualized basis, by the second calendar quarter of 2008
Acceleration of NOL utilization
Optimization of businesses and projects for second year synergies
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Target Model
R&D
SG&A
Gross Margin
Operating Margin
Percentage of Revenue
20%
15%
60%
25%
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Exar Product Portfolio Exar Serial Communications Networking and Transmission Storage Interconnect
UARTs Classic PCI Combo I2C/SPI Wireless Next Gen Increasing Integration Low Voltage/Low Power
High Performance Value Add Features Aggregation and Transport T/E Carrier LIUs and Framer
Sonet/SDH PHYs and Framer Widest Variety of Supported Rates Advanced Features Ethernet over SONET and Aggregation Framer Cost Effective Carrier Grade Reliability Multi-Protocol Repeater Active-Active/Passive Port Selector Port-Mulitiplier Support Failover Protection Improve Signal Integrity and EMI Ultra-Low Power/SATA Channel
Interoperability with Industry Leading Hosts and Drives
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Exar Revenue & Gross Margin
EXAR
(In $M)
Revenue
Gross Margin
$80 $70 $60 $50 $40 $30 $20 $10 $0
FY2003 FY2004 FY2005 FY2006 FY2007
$67.0 $67.2 $57.4 $67.0 $68.5 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0%
FY2003 FY2004 FY2005 FY2006 FY2007
54.9% 65.4% 68.3% 67.8% 67.9%
Note: GAAP Gross Margins include stock-based compensation and amortization of intangibles.
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Exar FY2007 Revenue
Exar
Product Revenue
Geographic Revenue
3%
58%
39%
30%
44%
26%
Networking and Transmission
Serial Communications
Video and Imaging
Americas
Europe
Asia
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Opportunity for Shareholder Value Creation
EXAR
Experience Our Connectivity TM
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Sipex Solved by
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