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Zoran Issues Open Letter to Stockholders
SUNNYVALE, CA – March 01, 2011 - Zoran Corporation (NASDAQ:ZRAN) today issued the following open letter to its stockholders: Following is the text of the letter from Dr. Levy Gerzberg, President and Chief Executive Officer of Zoran, and Uzia Galil, Chairman of the Board of Directors of Zoran, speaking on behalf of Zoran’s Board: Dear Zoran Stockholder: We need your support to prevent Ramius LLC from jeopardizing the value creation potential of the proposed merger of Zoran and CSR plc. As we recently announced, Zoran is proposing to merge with CSR in an all stock transaction which offers Zoran stockholders a significant premium – the implied price per share being offered by CSR represents a premium of approximately 39.9% to the closing price of Zoran and a premium of approximately 89% to the enterprise value of Zoran net of cash as of February 18, 2011, the last business day before the merger announcement. Importantly, Zoran stockholders are being offered 35% fully diluted ownership in CSR and will therefore have the opportunity to benefit from the upside of being owners of a larger, stronger and more diversified company, as well as receiving the benefit of significant expected cost synergies in the amount of $50 million in pre-tax run rate by the end of 2011, resulting from the transaction. In addition, CSR has announced a stock buyback in the amount of up to $240 million during the next 12 months, representing approximately 12.4% of the proforma company. Combined with the stock buyback, the transaction is expected to be strongly double digit accretive in 2012. This transaction is highly strategic for both Zoran and CSR. The combination of Zoran and CSR creates a top 10 fabless semiconductor company that can provide differentiated, integrated technology solutions to address the rapidly growing market opportunity for connected and location-aware multimedia devices, such as handsets, digital cameras and home entertainment equipment. Our technology portfolios are uniquely complementary and will enable the merged company to deliver advanced platforms both to capture and stream media-rich content. We have already identified a number of opportunities where the combination of our capabilities can provide differentiated product offerings for our customers, THUS POTENTIALLY CREATING SIGNIFICANT VALUE FOR COMPANY STOCKHOLDERS. WE URGE STOCKHOLDERS TO REJECT RAMIUS’ ATTEMPTS TO TAKE CONTROL OF OR GAIN REPRESENTATION ON ZORAN’S BOARD; ADDING RAMIUS NOMINEES COULD RISK UNCERTAINTY WITH CUSTOMERS, EMPLOYEES AND PARTNERS THEREBY JEOPARDIZING THE VALUE CREATION POTENTIAL OF THE PROPOSED MERGER Notwithstanding our belief that the CSR transaction maximizes value for Zoran stockholders, and that Ramius should support the transaction by withdrawing its attempt to replace Zoran’s independent directors, Ramius has continued its consent campaign. Ramius recently issued a press release questioning the CSR transaction, based on what we believe are unfounded and ill-informed assumptions. Zoran’s Board believes that adding Ramius’ nominees could create significant uncertainty among its customers, employees and partners and therefore could jeopardize the value creation of the transaction. Rather than concentrating on Ramius’ disruptive and counterproductive consent campaign, Zoran stockholders should focus their attention on the compelling transaction with CSR that Zoran’s Board negotiated to maximize value for all Zoran stockholders. Moreover, the backgrounds and agenda of the Ramius nominees raise serious concerns, including a lack of substantive experience with any of Zoran’s current businesses. Given the critical importance of Board oversight of the completion of the CSR transaction, we believe that now is not the right time to disrupt the composition of the Zoran Board. ZORAN’S BOARD HAS TAKEN ACTION TO MAXIMIZE STOCKHOLDER VALUE Zoran’s Board unanimously determined that CSR’s offer represents the most compelling alternative for Zoran stockholders following a thorough evaluation of a large universe of cash and stock buyers. This process included proactively reaching out to seven cash buyers, none of whom ultimately offered a more compelling transaction. Independent Wall Street analysts have applauded the rationale of the proposed merger. As one research analyst noted: • "We believe that this is the best possible outcome for Zoran shareholders. There are two other options for the company: 1) Zoran continues with its restructuring and attempts to deliver on the DTV turnaround, and 2) Ramius takes over the board and potentially divests/shutters the DTV business. Neither is likely to result in a better financial outcome for shareholders and especially not in the near term.” • “The transaction does have strategic synergies as the two companies compete in two different but adjacent segments.” • “We see the announced acquisition of Zoran by CSR as a positive event for shareholders.” • “In our opinion it is unlikely that Zoran shareholders would be better off under a Ramius board considering the current takeout price.” We are confident that this thorough process undertaken over the course of the past several months has resulted in a transaction that creates the greatest value for Zoran stockholders, by both providing an immediate premium as well as permitting continued exposure to upside in the combined businesses. Ramius stated that this transaction “may undervalue” Zoran and questioned “whether [Zoran’s] Board ran a full and fair sale process,” despite the fact that Ramius had absolutely no knowledge of the process that was conducted. We urge you to disregard Ramius’ ill-informed and reactionary rhetoric and we are gratified that, based on recent conversations with stockholders, many Zoran stockholders have acknowledged the significant value creation that could be delivered by a combination with CSR. REJECT THE RAMIUS GROUP’S EFFORTS TO TAKE CONTROL OF OR GAIN REPRESENTATION ON THE BOARD BY TAKING THE FOLLOWING STEPS: 1. Do not sign the Ramius Group’s white consent card; 2. If you have signed the Ramius Group’s white consent card, you may revoke that consent by signing, dating and mailing the enclosed BLUE Consent Revocation Card immediately; and 3. Even if you have not signed the Ramius Group’s white consent card, you can show your support for your Board and fellow stockholders by signing, dating and mailing the enclosed BLUE Consent Revocation Card. Thank you in advance for your support. Sincerely, Uzia Galil Levy Gerzberg About Zoran Corporation Zoran Corporation, based in Sunnyvale, California, is a leading provider of digital solutions in the growing digital entertainment and digital imaging markets. With two decades of expertise developing and delivering digital signal processing technologies, Zoran has pioneered high-performance digital audio and video, imaging applications, and Connect Share Entertain™ technologies for the digital home. Zoran’s proficiency in integration delivers major benefits for OEM customers, including greater capabilities within each product generation, reduced system costs, and shorter time to market. Zoran-based DTV, set-top box, broadband receiver (silicon tuners), Blu-ray Player, digital camera, and multifunction printer products have received recognition for excellence and are now in hundreds of millions of homes and offices worldwide. With headquarters in the U.S. and additional operations in China, France, Germany, India, Israel, Japan, Korea, Taiwan and the U.K., Zoran may be contacted on the World Wide Web at www.zoran.com or at 408-523-6500.
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