Vishay offers $1.6B for International Rectifier in unsolicited bid
Vishay said its offer represents an approximate 13% premium over the closing price of IR’s common stock of $18.82 on August 14, and a 20% premium over its 30-day moving average of $17.69.
By Ann Steffora Mutschler, Senior Editor -- EDN, August 15, 2008
Malvern, Pa-based discrete and passive semiconductor company Vishay Intertechnology Inc said today it has made a non-binding bid to International Rectifier (IR) Corp’s board of directors to acquire all outstanding shares of IR’s common stock for $21.22 per share in cash, for a total value of approximately $1.6 billion.
Vishay said its offer represents an approximate 13% premium over the closing price of IR’s common stock of $18.82 on August 14, and a 20% premium over its 30-day moving average of $17.69.
IR declined to comment at this time, while a call to Vishay for further comment was not returned by press time.
In February, IR named former Amkor executive Oleg Khaykinto president and CEO, succeeding Donald Dancer, who has served as acting CEO of the El Segundo, Calif.-based power management IC company since August 30, 2007. Dancer stepped in following the resignation of former CEO Alex Lidow, at the company's request in October 2007.
Earlier this month, IR notified the US Securities and Exchange Commission (SEC) that in February, the company filed a current report on Form 8-K in which it reported entering into an employment agreement dated February 6 with Oleg Khaykin in connection with his election as the company’s president and CEO, in which it committed that certain equity awards would be provided to Khaykin on the third business day following the date on which the company became current in its reporting obligations to the SEC.
The company filed all of its delinquent reports with the SEC on August 1, and on August 6, IR approved the equity awards to Khaykin of: (i) an award of stock options covering 750,000 shares of the company's common stock, with a per-share exercise price equal to $18.55, the closing price of a share of the company's common stock on the New York Stock Exchange on the date of grant, August 6; and (ii) an award of restricted stock units covering 250,000 shares of IR’s common stock.
At press time, Vishay’s stock was trading down approximately 10% from its $10.18 closing price on Thursday, while IR’s stock was trading approximately 15% higher than its Thursday closing price of $18.82.
Commenting on the offer, Romit Shah, senior VP of US semiconductor research at Lehman Brothers believes IR is unlikely to accept Vishay's offer based on the following: (1) June quarter earnings of breakeven (pro forma ex legal expenses) likely represent a cyclical bottom; (2) a net cash balance of roughly $10/share could be a good safety net in an extended downturn and will likely be used to buy back the stock and pursue acquisitions; (3) the offer implies an enterprise value to sales multiple of 1x versus a historical average of 2.5-3x.
“In our view, other competitors that could also potentially pursue IR include STMicroelectronics, Fairchild Semiconductor, and ON Semiconductor, though we note that a potential transaction would be dilutive,” Shah concluded, in his report.
