IR to stockholders: 'Beware' Vishay's board nominations, tender offer
In a letter to shareholders, IR calls the $23 per share offer "inadequate" and says it believes that the roadmap to be implemented by its management team will deliver greater value to the IRF shareholders than Vishay's offer.
By Suzanne Deffree, Managing Editor, News -- EDN, September 30, 2008
International Rectifier Corp's board is urging shareholders not to tender their shares following a $23 per share offer from Vishay Intertechnology Inc made Monday and to vote down Vishay's board nominations.
“The Vishay offer is inadequate and should be rejected by our shareholders,” IR Chairman Richard J Dahl (pictured) said in a statement following the tender offer from its rival. “Although Vishay made its initial proposal on August 15, 2008, it has yet to secure commitments to fund its offer. Instead, Vishay has chosen to launch a highly conditional offer that is subject to Vishay's receipt of the proceeds of financing, which Vishay has stated that it is still ‘working’ on obtaining and which it may never obtain, particularly in today's turbulent credit markets.”
Such a reaction from IR was not unexpected. The company had previously rejected unsolicited bids from Vishay, the latest of which was valued at $23 a share or approximately $1.7 billion.
Vishay has pointed out, however, that the $23 price represents a 30% premium over IR's average closing price for the 30 trading days preceding its original $1.6 billion acquisition proposal made on August 15.
As of 12:50pm eastern, IR's stock, IRF, was trading at $18.19, down from its Monday close of $18.22.
Beyond the offers, Vishay has further nominated three independent directors for board election at IR's delayed 2007 annual meeting of stockholders, scheduled to be held on October 10, and proposed amendments to IR's bylaws, which will also be voted on at the meeting.
IR in a letter to shareholders Monday, headed in all capital letters "Beware!!! Vishay does not have your best interests in mind, vote for IRF's directors at the 2007 annual meeting vs a highly conditional inadequate $23 offer," said it believes that the roadmap to be implemented by its management team will deliver greater value to the IRF shareholders than Vishay's offer.
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The letter further offered highlights from IR's product portfolio, including its recent GaN investment; said it does not believe that Vishay's offer reflects the manufacturing synergies, operating expense synergies, and revenue synergies that could be achieved by an acquisition of IR; and questioned Vishay's financial ability to support its tender offer, its board nominees, and its proposed bylaw changes.
"This election is not just another 'short slate' election where dissident nominees will 'shake up' a board," the letter signed by Dahl and IR CEO Oleg Khaykin reads.
"Support for the Vishay group would be an endorsement of a mediocre and untimely offer — which may never close — and could significantly undermine the board's negotiating leverage with Vishay or with any third party if the board determined to sell the company.
"Indeed, if a sale process commenced, how would likely bidders for the company respond if nominees of one of the bidders — Vishay — were on the board and a part of the process? How would these prospective bidders view the $50,000 Vishay payment to each of its nominees?
"To be sure, now is not a sensible time to put the company up for sale. Except to seek to compel a sale of the company in one of the worst merger and credit markets in memory, what would the three Vishay nominees add? Their presence on the board — nominees of Vishay threatening meritless litigation with the company — could be very disruptive and destabilizing," the letter states.
As of 1pm eastern, Vishay had not responded to the IR letter.
