Filed by UPEK, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company:
AuthenTec, Inc.
Commission File No. 001-33552
Additional Information
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction, a proxy statement, solicitation statement, registration statement or other disclosure document (any of the foregoing, “disclosure documents”) will be filed with the SEC, and would be mailed to AuthenTec stockholders. This communication is not a substitute for any disclosure documents, including without limitation any proxy statement or solicitation statement or registration statement, UPEK may file with the SEC and send to AuthenTec stockholders in connection with any business combination transaction with AuthenTec or any solicitation of the stockholders of AuthenTec. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ ANY SUCH DISCLOSURE DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. INVESTORS AND SECURITY HOLDERS WILL BE ABLE TO OBTAIN FREE COPIES OF ANY SUCH DOCUMENTS FILED WITH THE SEC BY UPEK AT WWW.UPEK.COM AND THROUGH THE WEB SITE MAINTAINED BY THE SEC AT WWW.SEC.GOV. FREE COPIES OF ANY SUCH DOCUMENTS CAN ALSO BE OBTAINED BY DIRECTING A REQUEST TO UPEK’S PROXY SOLICITOR, INNISFREE M&A INCORPORATED AT 888-750-5834.
UPEK and certain of its directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of any business combination transaction or solicitation of the stockholders of AuthenTec. As of the date of this communication, UPEK is the stockholder of record and the beneficial owner of 1000 shares of AuthenTec Common Stock. INFORMATION REGARDING UPEK’S DIRECTORS AND EXECUTIVE OFFICERS AND OTHER PARTICIPANTS ARE INCLUDED IN ANNEX A TO THE PRESS RELEASE FILED BY UPEK WITH THE SEC PURSUANT TO RULE 425 ON JANUARY 29, 2010. OTHER INFORMATION REGARDING THE PARTICIPANTS IN A PROXY SOLICITATION AND A DESCRIPTION OF THEIR DIRECT AND INDIRECT INTERESTS, BY SECURITY HOLDINGS OR OTHERWISE, WILL BE CONTAINED IN THE DISCLOSURE DOCUMENTS, INCLUDING ANY PROXY STATEMENT, TO BE FILED BY UPEK WITH THE SEC WHEN THEY BECOME AVAILABLE.
Safe Harbor Statement
This communication contains statements that may relate to expected future results and business trends that are based upon UPEK’s current estimate, expectations, and projections about the industry, and upon management’s beliefs, and certain assumptions it has made that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “guidance,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “prospects,” “outlook,” “forecast,” and variations of these words or similar expressions are intended to identify “forward-looking statements.” In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances, including any underlying assumptions, are “forward-looking statements.” Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any “forward-looking statement” as a result of various factors. These factors include, but
are not limited to: the ability to promptly and effectively integrate the businesses of AuthenTec, Inc. (“AuthenTec”) and UPEK and any necessary actions to obtain required regulatory approvals, demand for, and market acceptance of, new and existing fingerprint sensors in the PC and wireless markets, general market and macroeconomic conditions, the UPEK’s ability to secure design wins for enterprise and consumer laptops and wireless devices, customer design wins materializing into production programs, the timely introduction of new products, the rate at which UPEK increases its activity and opportunities in the wireless market, and additional opportunities in various markets for applications that might use UPEK’s products, and changes in product mix. These “forward-looking statements” are made only as of the date hereof, and UPEK undertakes no obligation to update or revise the “forward-looking statements,” whether as a result of new information, future events or otherwise.
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On February 18, 2010, UPEK made the following slides available to investors and analysts.
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 Convenient
Identity Solutions at Your Fingertips Overview of Proposed Merger of UPEK with AuthenTec February 18, 2010 |
 Cautionary
Statement This presentation release contains statements that may relate to expected future results and business trends that are based upon UPEK, Inc.’s (“UPEK”) current estimate,
expectations, and projections about the industry, and upon management’s beliefs,
and certain assumptions it has made that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “guidance,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “prospects,” “outlook,” “forecast,” and variations of these words or similar expressions are intended to identify “forward-looking
statements.” In addition, any statements that refer to expectations, projections, or other characterizations of
future events or circumstances, including any underlying assumptions, are
“forward-looking statements.” Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any “forward-looking statement” as a result of various factors. These factors include, but are not limited to: demand for, and market acceptance of, new and existing fingerprint sensors in the PC and wireless
markets, general market and macroeconomic conditions, UPEK’s ability to secure design wins for enterprise and consumer laptops and wireless devices, customer design wins materializing
into production programs, the timely introduction of new products, the rate at which UPEK
increases its activity and opportunities in the wireless market, and additional opportunities in various markets for applications that might use UPEK’s products, and changes in product mix. These “forward-looking statements” are made only as of the date hereof, and UPEK undertakes no obligation to update or revise the “forward-looking statements,” whether as a result of new information, future events or otherwise. All information in this presentation is © 2010 UPEK, Inc. All Rights Reserved. |
 Important Additional Information This communication does not constitute an offer to sell or the solicitation of an
offer to buy any securities or a solicitation of any vote or approval. In
connection with any solicitation of the stockholders of AuthenTec
and in connection with the proposed transaction, a proxy statement, solicitation statement, registration statement and/or other disclosure documents (any
of the foregoing, "disclosure documents") will be filed with the
SEC, and would be mailed to AuthenTec stockholders. This communication is
not a substitute for any disclosure documents, including without
limitation any proxy statement or solicitation statement or registration statement, UPEK may file with the SEC and send to AuthenTec stockholders in connection with any solicitation of the stockholders of AuthenTec or any business combination transaction with AuthenTec. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ ANY SUCH DISCLOSURE DOCUMENTS FILED WITH
THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. INVESTORS AND SECURITY HOLDERS WILL BE ABLE
TO OBTAIN FREE COPIES OF ANY SUCH DOCUMENTS FILED WITH THE SEC BY UPEK AT
WWW.UPEK.COM AND THROUGH THE WEB SITE MAINTAINED BY THE SEC AT WWW.SEC.GOV. FREE COPIES OF ANY SUCH DOCUMENTS CAN ALSO BE OBTAINED BY DIRECTING A REQUEST TO UPEK'S PROXY SOLICITOR, INNISFREE M&A INCORPORATED AT 888-750-5834. UPEK and certain of its directors and executive officers and other persons may be
deemed to be participants in the solicitation of proxies in respect of the
annual stockholders meeting, the call of a special stockholders meeting,
any special stockholders meeting, any business combination transaction or
any other solicitation of the stockholders of AuthenTec. As of the date of this communication, UPEK is the stockholder of record and the beneficial owner of 1000
shares of AuthenTec Common Stock. INFORMATION REGARDING UPEK'S DIRECTORS AND EXECUTIVE OFFICERS AND OTHER PARTICIPANTS ARE INCLUDED IN ANNEX A TO THE PRESS RELEASE FILED
BY UPEK WITH THE SEC PURSUANT TO RULE 425 ON JANUARY 29, 2010. OTHER
INFORMATION REGARDING THE PARTICIPANTS IN A PROXY SOLICITATION AND A
DESCRIPTION OF THEIR DIRECT AND INDIRECT INTERESTS, BY SECURITY HOLDINGS
OR OTHERWISE, WILL BE CONTAINED IN THE DISCLOSURE DOCUMENTS, INCLUDING ANY
PROXY STATEMENT, TO BE FILED BY UPEK WITH THE SEC WHEN THEY BECOME AVAILABLE. |
 © 2010 UPEK, Inc. All Rights Reserved Proposed Transaction Overview Stock for Stock Merger • 50%-50% stock for stock merger between AuthenTec and UPEK - AuthenTec stockholders would receive 50% of the combined company (and potentially increased to 66-2/3% due to the CVRs, as described below) - UPEK stockholders would receive 50% of the combined company (but potentially decreased to 33-1/3% due to the CVRs, as described below) Cash Dividend • $40 million aggregate cash dividend - Payable pro rata to AuthenTec stockholders immediately prior to closing • UPEK stockholders would not receive any of the cash dividend Contingent Value Rights (“CVRs”) • AuthenTec stockholders would receive one CVR with each share of combined company common stock - CVRs would deliver 66-2/3% ownership to AuthenTec stockholders in certain circumstances as described on subsequent slide on the CVR terms • UPEK stockholders would not receive any CVRs |
 Strategic
Benefit Leading Identity Management and Fingerprint Solution Company • Would create the leading fingerprint sensor company • Substantially larger company, roughly doubling size from 2009 • Better able to drive innovation and open new markets • Far superior software platform • Better able to increase the acceptance and implementation of fingerprint sensors globally Additional Growth Prospects • UPEK design wins with Tier 1 wireless OEMs • UPEK design wins with Tier 1 PC OEMs • UPEK design wins with healthcare, banking, ID, and government verticals More Diversified Business • UPEK solutions applicable to more segments • Enhanced IP portfolio • Global company with low-cost development • Enhanced management Synergies • Synergy opportunities will drive profitability • Scale for reduce costs © 2010 UPEK, Inc. All Rights Reserved |
 Approach Call of Special Meeting • UPEK will solicit AuthenTec stockholders to call a special meeting of stockholders - 10% of AuthenTec stockholders must deliver “agent designations” in order to call a special meeting • At the special meeting (if called), UPEK will seek to remove all incumbent AuthenTec directors and elect a new slate of directors that UPEK believes would be open to considering the merger proposal Annual Meeting • UPEK is also going to nominate an alternative slate of 6 directors at AuthenTec’s upcoming 2010 annual stockholders meeting - UPEK’s nominees are: Vincent F. Titolo, Dr. Randall C. Fowler, Gary Martell, Robert N. Blair, Keith R. Lobo and Anthony Maher • The nominees have substantial industry experience Open to Negotiated Transaction • UPEK remains open to a negotiated deal with AuthenTec • Thus far, AuthenTec has not called UPEK to discuss the merger proposal © 2010 UPEK, Inc. All Rights Reserved |
 The Current Situation
for AuthenTec Stockholders • AuthenTec’s stock has decreased dramatically since IPO. Stockholder value has similarly declined. • While the economic downturn has hurt everyone, technology stocks have recovered to their original value since the AuthenTec’s IPO, while AuthenTec’s market capitalisation has decreased by 75%. • Most of AuthenTec’s market capitalisation is represented by its cash, not its intrinsic business. • Given this performance, it is difficult to attract additional investors. © 2010 UPEK, Inc. All Rights Reserved Peak market cap. of ~$450m. In excess of 17 months with no improvement. Tech stocks have recovered since AUTH IPO, while AUTH decreased by 75%. IPO at ~$300m market cap. Reports loss of a 2009 design-in opportunity at a ‘significant PC customer.’ Even a new Chairman has not meaningfully improved stock. AUTH is not a very liquid stock, making it challenging to attract additional investors. |
 What UPEK Brings to
the Combination • Short-term growth via significant business from a Tier 1 PC OEM that has been won from AuthenTec. UPEK is also currently shipping to a majority of the top-10 PC OEMs. • Longer-term growth in 2011 and beyond via multiple Tier 1/2 wireless OEMs. • Diversification of the business via strong industrial offerings serving government, healthcare, banking, and ID applications. • Industry leading, high volume software platform, with installed base in excess of 20m units. • Enhanced product portfolio, including software, hardware, and finished products. • Low cost development centres in Eastern Europe and Asia. • Extensive early patent portfolio, similar in size to AuthenTec’s. © 2010 UPEK, Inc. All Rights Reserved |
 UPEK’s
Wireless Growth Prospects • Three smartphone platforms with Key Tier 1 handset vendor. - Launch date early 2011. - Several other models in evaluation, including highest running platforms, which are interested in optical joystick replacement. • Three PDA platforms with Key Tier 1 handset vendor. - Launch date 2H10. - Higher volume models in evaluation. • Two volume phone platforms with technology-leading ODM. - Launch date 2H10. - Android-based. • One USB modem with Key Tier 1. - Launch date 1H10. • Android version of Protector Suite® identity management software in beta. © 2010 UPEK, Inc. All Rights Reserved |
 Combination Creates Industry Leader • One of earliest two silicon fingerprint industry pioneers - first products in c.1998 (Harris). • Leader in fingerprint semiconductor innovation – one chip smartsensor. • Leadership in mobile with over 10 million fingerprint phones launched since 2003. • Platform supported by leading partners – e.g. Broadcom and Qualcomm. • 100+ patents since circa 1998. • Broad customer base and segment diversification. • Enhanced skills. • Complimentary customer base. • Increased scale for cost reduction. • Global company with optimum cost structure and access to low cost development centres in Eastern Europe and Asia. • True capability to drive ecosystem with hardware / software solutions. • Complimentary, expanded segment coverage and increased business diversification. + • One of earliest two silicon fingerprint industry pioneers - first products in 1998 (STM). • Leader in biometric client software innovation with over 20 million seats of Protector Suite®. • Leadership in government applications with unique FIPS-201 certified silicon sensors. • Diversified product lines including Eikon ® Finished products and software offerings. • 100+ patents since 1996. • Broad customer base and segment diversification. © 2010 UPEK, Inc. All Rights Reserved Combination Adds |
 Terms of the
CVRs General • Each CVR would convert into one additional share of common stock of the combined company if: - the average closing price of the combined company's common stock is below 140% of the Pro Forma January 28 Stock Price - for any sixty (60) consecutive trading day period during the Measuring Period (and calculated without giving effect to any stock split or reverse stock split) - UPEK Stockholders would not receive any CVRs “Measuring Period” “Pro Forma January 28 Stock Price” • The “Measuring Period” means the period beginning 6 months after the closing and ending 18 months after the closing • The “Pro Forma January 28 Stock Price” is the price equal to, as determined by an independent financial advisor: - the closing price of the Company’s common stock on January 28, 2010 - after giving pro forma effect to the payment of the Cash Dividend (as if it occurred on January 28, 2010) Trading • CVRs would trade together with, and not separately from, the common stock of the combined company © 2010 UPEK, Inc. All Rights Reserved |
 Thank You
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