Transmeta takeover offer on table

Riley Investment Management further filed a shareholder derivative action against several Transmeta board members and management.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 2/1/2008

Transmeta has received an unsolicited acquisition offer from investment banking firm Riley Investment Management LLC for $15.50 per share in cash.

Riley, which currently owns about 7% of Transmeta, sent a letter to the troubled company on Thursday expressing its interest to acquire all of the outstanding shares at a premium of about 21% over Transmeta’s Wednesday closing price and a premium of about 19% over the average closing price of the common stock for the 30 trading days. Transmeta’s stock was trading at $13.99 at 2:20pm eastern today, up from its Thursday close of $13.46.

Transmeta issued a short statement this morning in response, saying that “consistent with its fiduciary duties, the Transmeta board of directors will carefully consider and evaluate in due course [Riley's] unsolicited indication of interest.”

Riley plans to withdraw the offer if it does not receive a favorable response from the company by February 8.

Riley further filed a shareholder derivative action on against several Transmeta board members and management, including  John O’ Hara Horsely, Richard Hugh Barnes, Lester M. Crudele, Robert V. Dickinson, Murray A. Goldman, William P. Tai, Thomas Peter Thomas, Rick Timmins, and Sujan Jain. The complaint alleges breaches of fiduciary duty, gross mismanagement, waste of corporate assets and abuse of control arising from actions taken by the board and management.

Specifically, Riley cited the company’s agreement with defendant Horsley, Transmeta’s general counsel, “to pay him an outrageous, illegal and unconscionable bonus of over $10 million simply for doing his job and settling an intellectual property lawsuit against Intel 10 months after it was filed, and likely settling for less money than was reasonable due to the incentive to settle.” Riley also noted the $1.2 million in cash bonuses granted to Crudele and Jain in connection with the Intel settlement. The investment company further noted Transmeta’s involvement in stock-options backdating, for which it faced a severe penalty.

In related news, Yahoo! received an unsolicited acquisition offer at a high stock price premium this week from Microsoft.