Monday, Centillium Communications, Inc. (CTLM) said that independent proxy advisory firms RiskMetrics, Glass Lewis & Co. and PROXY Governance, Inc. have concluded that the merger with TranSwitch Corporation (TXCC) is in the best interest of Centillium stockholders and recommended that Centillium's stockholders vote for the transaction.
On July 9, TranSwitch said it agreed to acquire Fremont, California headquartered communications processing technology provider Centillium Communications. Under the terms of the deal, TranSwitch is expected to issue an aggregate of 25 million shares of common stock and $15 million, which will be allocated pro rata among holders of Centillium common stock and vested, in-the-money, stock options outstanding at the closing of the merger.
The special meeting of Centillium stockholders to approve the merger is scheduled on Oct. 24. Consummation of the proposed merger will require, among other conditions, the affirmative vote of a majority of Centillium shares outstanding. Assuming all other closing conditions are satisfied, the merger is expected to close soon after the required vote is obtained.
In its report recommending the merger with TranSwitch, RiskMetrics said, "Based on our review of the terms of the transaction and the factors described above, in particular the reasonable premium and strategic process, we believe that the merger agreement warrants shareholder support."
Glass Lewis noted that, "The board conducted an extensive strategic review and held discussions with multiple interested parties. The proposed consideration is financially fair relative to similar precedent transactions, the equity premium is significant, and shareholders will hold an interest in the enlarged company which has greater growth opportunities relative to Centillium on a stand-alone basis."
PROXY Governance said, "shareholders would be best served by supporting this proposal" and in doing so recognized that, " ... .the offer itself represented a significant premium to pre-announcement trading prices, the market responded strongly to the initial news of the deal, and no additional bidders have emerged in the three moths since the deal was announced."
CTLM closed Friday's regular trading session at $0.48 and TXCC at $0.38.
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