Verigy Ltd.

On March 25, 2011, the Agreement and Plan of Merger, dated as November 17, 2010, by and among Verigy, Alisier Limited, a corporation organized under the laws of Singapore (“Holdco”), Lobster-1 Merger Corporation, a Massachusetts corporation and a wholly-owned subsidiary of Verigy, Lobster-2 Merger Corporation, a Massachusetts corporation and a wholly-owned subsidiary of Holdco, and LTX-Credence Corporation (“LTXC”), a Massachusetts corporation (the “Merger Agreement”), was terminated. A description of the material terms of the Merger Agreement can be found in the Current Report on Form 8-K filed by Verigy on November 18, 2010, and is incorporated herein by reference. In connection with the termination of the Merger Agreement, Verigy has paid LTXC a termination payment of $15 million.

On March 28, 2011 (Japan Time), Verigy Ltd., a corporation organized under the laws of Singapore (“Verigy”), entered into an Implementation Agreement with Advantest Corporation (“Advantest”), dated as of March 28, 2011 (the “Implementation Agreement”), that provides for all issued and outstanding ordinary shares of Verigy to be transferred to Advantest in exchange for US$15.00 per share in cash (the “Transaction”). In connection with the Transaction, Verigy filed a definitive proxy statement with the U.S. Securities and Exchange Commission (“SEC”) on May 20, 2011 and expects to hold a special meeting of shareholders on June 17, 2011 to approve the Transaction.

On March 28, 2011 (Japan Time), we entered into an Implementation Agreement (the “Implementation Agreement”) with Advantest Corporation pursuant to which, subject to the satisfaction or waiver of certain conditions, all of the issued and outstanding ordinary shares of Verigy will be transferred to Advantest in exchange for US$15.00 per share in cash (the “Transaction”). The Transaction is subject to numerous closing conditions, including but not limited to, the approval of our shareholders, the sanction of the High Court of the Republic of Singapore (the “Singapore Court”) and review by the Antitrust Division of the Department of Justice (the “DOJ”) and the Federal Trade Commission under the HSR Act. On May 20, 2011, Verigy filed a definitive proxy statement with the SEC in connection with the Transaction and expects to hold a special meeting of shareholders on June 17, 2011 to approve the Transaction. Even if the requisite majority of our shareholders approve of the Transaction, the Transaction must then be reviewed and approved by the Singapore court. While we do not anticipate that the proposal to approve the Transaction will be rejected by either our shareholders or by the Singapore court, there can be no assurance that we will receive the number of shareholder votes required under Singapore law to approve the Transaction. Further, we cannot predict whether the Singapore court will sanction the Transaction, notwithstanding the approval of our shareholders.

All of the matters described above, alone or in combination, could cause the failure of the Transaction to be consummated. If the Transaction does not close, the price of our ordinary shares may drop to the extent that the current market price of our ordinary shares reflects an assumption that the Transaction will be completed. On December 3, 2010, the day before the announcement of the Transaction, the closing price of our ordinary shares was $9.14. On December 7, 2010, following the announcement of the Transaction, the closing price of our ordinary shares was $13.15. Further, a failed Transaction may result in litigation, negative publicity and a negative impression of us in the investment community. Any disruptions to our business resulting from the announcement and pendency of the Transaction and from intensifying competition from our competitors, including any adverse changes in our relationships with our customers, vendors and employees, could continue or accelerate in the event of a failed Transaction. There can be no assurance that our share price, business, these relationships or our financial condition will not be adversely affected, as compared to the condition prior to the announcement of the Transaction, if the Transaction is not consummated.

Advantest’s unsolicited proposal to acquire all of our outstanding shares occurred during the pendency of our proposed merger with LTXC, and in connection with the termination of the merger agreement with LTXC, we were required to pay LTXC a $15 million break-up fee. Further, in addition to the legal, accounting and advisory fees associated with the Transaction generally, the compliance with the second request from the DOJ has required us to invest substantial human and financial resources, and resulted in the incurrence of significant additional expenses which have been material to our financial position and results of operations, including our financial results in the three months ended April 30, 2011. In addition, if the Transaction is terminated upon the occurrence of certain triggering events, as described in the Implementation Agreement, we may be required to pay Advantest a termination fee of $7.5 million.