Post a Comment
Vishay ups IR bid to $1.7B
While Vishay raised its proposal to acquire International Rectifier for $23 per share in cash, the company also nominated three candidates for elections to IR's board of directors and filed a lawsuit again IR regarding its delayed annual meeting.
By Ann Steffora Mutschler, Senior Editor -- Electronic News, 9/10/2008
Following an unsuccessful first bid for International Rectifier Corp (IR), Malvern, Pa–based Vishay Intertechnology Inc today launched a second bid for the El Segundo, Calif-based power management IC maker, increasing the price of its all-cash proposal to acquire all of the outstanding shares of IR’s common stock to $23 per share for a total value of $1.7 billion.
Vishay’s original acquisition proposal, and a 30% premium over IR’s average closing price for the 30 trading days preceding that announcement. Vishay said it intends to commence a tender offer to purchase all of the outstanding shares of IR common stock for $23 per share in cash.
“We firmly believe there are significant and compelling benefits to a combination of Vishay and International Rectifier. We are committed to bringing our two companies together to create a global leader in the manufacturing of power integrated circuits, discrete semiconductors and passive electronic components. Our increased all-cash proposal provides International Rectifier’s stockholders with an opportunity to realize significant premium value for their investment in International Rectifier. Furthermore, we believe that a combined Vishay-International Rectifier would provide customers a broader and more fully integrated product and technology portfolio that will enable us to better address their needs,” explained Dr. Felix Zandman, Vishay founder and executive chairman of the board, in a statement.
Also, Dr. Gerald Paul, president and CEO of Vishay noted, “From the outset, it has been our strong preference to work together with International Rectifier and its Board of Directors to negotiate a mutually beneficial transaction for our respective stockholders, employees, customers, partners and other stakeholders. Despite our best efforts, International Rectifier has flatly refused to discuss a business combination with us and to explore the benefits of such a combination. Their board has set a very tight timeframe for the company’s stockholders to have any say over the matters to be considered at a stockholders meeting which is being delayed by almost eleven months. As a result, we have been left with no alternative but to present our increased proposal directly to International Rectifier’s stockholders. We are confident that the stockholders, deciding for themselves, will find our increased all-cash proposal to be compelling.”
As such, Vishay has provided notice in accordance with IR’s bylaws of its intention to nominate three independent candidates for election to the IR board of directors at the 2007 annual meeting of stockholders, which has been delayed since 2007 and it is now scheduled to be held on October 10. IR stockholders of record as of September 19, 2008 are entitled to vote at the 2007 annual meeting. Vishay will file the necessary proxy solicitation materials with the Securities and Exchange Commission in connection with IR’s delayed 2007 annual meeting.
The candidates that Vishay intends to nominate are as follows:
--Ronald M. Ruzic: Prior to retiring in 2003, Ruzic was executive VP of BorgWarner Inc since 1992 and group president BorgWarner Automotive Inc since 1989. He also held positions with BorgWarner as president and general manager of Morse TEC Inc, VP – operations of Morse Automotive, VP – International of Morse Automotive, and various other positions with entities within the BorgWarner family of companies. After joining BorgWarner in 1968 as a senior manufacturing engineer for its subsidiary Morse Chain, Ruzic progressed through engineering and management positions and managed various BorgWarner operations in Italy, Mexico, Germany and the U.S.
--William T. Vinson: Vinson is currently a director and the chairman of Siemens Government Services Inc, a company that provides products and services to the U.S. government to improve national security. He is also a director and the chairman of SAP Government Support and Services Inc, a company that supplies information technology products, services and maintenance products. He serves on the Government Security, Audit and Compensation committees of each of these companies. Prior to his retirement in 1998, Vinson served as VP and chief counsel of Lockheed Martin Corp, a defense contractor. From 1992 to 1995, he served as VP and general counsel of Lockheed Corp and from 1990 to 1992, he was Lockheed’s VP-secretary and assistant general counsel.
--Yoram (Jerry) Wind: Professor Wind is the Lauder Professor, Professor of Marketing and Director of SEI Center for Advanced Studies in Management at The Wharton School, the business school of the University of Pennsylvania. He is also the founding academic director of The Wharton Fellows Program, an executive education program, and was the founding editor of Wharton School Publishing. Prof. Wind’s research and teaching areas include global marketing and business strategy, new product, market and business development and creativity and growth strategies. Wind also founded Wind Associates, a consulting firm that advises on overall global corporate and business strategy and transformation as well as marketing strategy and development of new businesses. Wind is also an advisor to the CEO and members of the executive committee of SEI Investments, a financial services firm.
In addition, Vishay has notified IR that it intends to seek stockholder approval at the delayed 2007 annual meeting of certain amendments to IR’s bylaws, with one such amendment requiring IR to hold its 2008 annual meeting of stockholders to elect Class II directors by December 21, 2008. Class II directors were previously elected by the stockholders in November 2005 and IR recently announced its intention that the election of Class II directors would not be held until early 2009.
“International Rectifier’s stockholders deserve to be represented by directors who will not deprive them of an opportunity to receive a significant cash premium for their shares. All of our nominees have proven track records in their areas of expertise and have committed that, if elected, they will exercise their independent judgment as directors in accordance with their fiduciary duties. Vishay is confident they would seek to work with the existing members of the Board to determine the best course of action for International Rectifier’s stockholders,” Zandman continued.
Further, Vishay today commenced litigation in the Delaware Chancery Court regarding the timing of IR’s delayed 2007 and 2008 Annual Meetings and its proposed bylaw amendments.
IR had no immediate comment.
Vishay disclosed the increased all-cash proposal in a letter which Drs. Zandman and Paul sent today to IR’s board of directors, the full text of which follows:
September 10, 2008
The Board of Directors
International Rectifier Corporation
233 Kansas Street
El Segundo , California 90245Attention: Mr. Richard J. Dahl – Chairman
Mr. Oleg Khaykin – Chief Executive OfficerGentlemen:
Over the past several weeks, we have sought to engage you in discussions regarding our proposal to combine Vishay Intertechnology, Inc. and International Rectifier Corporation. As we have indicated to you, it has been and remains our strong preference to work together with International Rectifier and its Board of Directors to negotiate an agreement that is mutually beneficial for our respective stockholders, employees, customers and other stakeholders. We are disappointed that, despite our best efforts, including indicating that we are willing to discuss all aspects of our proposal, you have flatly refused to discuss any transaction with us and to explore the benefits of the combination of our two companies.
We are committed to bringing our two companies together to create a global leader in the manufacturing of power integrated circuits, discrete semiconductors and passive electronic components. To demonstrate our commitment to consummating a transaction in a timely manner, we are today increasing our all-cash proposal to acquire all of the outstanding shares of International Rectifier to $23.00 per share. Our proposal offers a full and fair price and provides an attractive opportunity for your stockholders to realize significant value for their investment in International Rectifier. The increased price represents a 22% premium over International Rectifier’s closing stock price on August 14, 2008, the last trading day prior to public disclosure of Vishay’s original acquisition proposal, and a 30% premium over International Rectifier’s average closing stock price for the 30 trading days preceding that announcement. Further, we are confident our increased proposal would provide your stockholders with far greater value than what International Rectifier could achieve on its own in the foreseeable future.
You have refused to engage with Vishay regarding our interest in a combination transaction and have set a very tight timeframe for your stockholders to have any say over the matters to be considered at a stockholders meeting which is being delayed by almost eleven months. As a result, you have left us with no alternative but to take the steps we are announcing today, including presenting our increased proposal directly to your stockholders. Thus, we intend to commence shortly a tender offer to acquire all of the outstanding shares of International Rectifier for $23.00 per share in cash.
International Rectifier stockholders deserve to be represented by directors who will not deprive them of the opportunity to receive a significant cash premium for their shares. Accordingly, today we are delivering written notice under International Rectifier’s bylaws that sets forth the names of three highly qualified, independent individuals whom we intend to nominate for election to International Rectifier’s Board of Directors at your delayed 2007 Annual Meeting of Stockholders, which you have scheduled for October 10, 2008. These nominees have committed that, if elected, they will exercise their independent judgment as directors in accordance with their fiduciary duties. We are confident they would seek to work with the rest of the Board to determine the best course of action for International Rectifier’s stockholders.
In addition, as stated in our written notice, we intend to propose amendments to International Rectifier’s bylaws at the upcoming delayed 2007 Annual Meeting of Stockholders. These bylaw amendments are designed to ensure that International Rectifier’s stockholders – who have had no say over the composition of their Board of Directors since 2006 – will have the opportunity to exercise their voting rights and elect a Board that will represent their interests. We note that half of the current International Rectifier directors were never elected by stockholders but were instead appointed by their fellow directors. And those incumbent directors who were previously elected by the stockholders held office during a disastrous, value-destructive period for International Rectifier and have not been subject to stockholder approval since then. Particularly in light of these circumstances, your recently announced intention to delay the 2008 Annual Meeting of Stockholders until sometime in 2009 is unacceptable, and we will be seeking your stockholders’ vote to require that the 2008 Annual Meeting actually be held in 2008.
We strongly believe that a combination of Vishay and International Rectifier will create significant value for both companies’ respective stockholders and customers. Accordingly, it remains our strong preference to work cooperatively with International Rectifier to bring our two companies together. We are prepared to commit all necessary resources to complete a transaction expeditiously. We and our advisors stand ready to meet with you and your advisors at any time to discuss our proposal and negotiate a merger agreement. We are confident that the Vishay and International Rectifier teams working together can make this transaction a mutual success.
Our Board of Directors unanimously supports the combination of our two companies. We expect you will give this proposal serious consideration and look forward to hearing from you.
Sincerely yours,
/s/ Felix Zandman /s/ Gerald Paul
Dr. Felix Zandman Dr. Gerald Paul
Executive Chairman of the Board of Directors President and Chief Executive Officer
