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Micrel battles shareholder's bid to oust board

Posted: 03 Apr 2008 ?? ?Print Version ?Bookmark and Share

Keywords:Micrel shareholder? IC industry? semiconductor?

Responding to the recent move by new shareholder Obrem Capital Management LLC (OCM) to take over the company's board of directors, Micrel Inc. April 1 wrote an open letter to the rest of its shareholders saying that OCM has made "inaccurate and self-serving assertions" in its proposals related to the takeover bid.

In the letter, which was released to the media, Micrel admitted that recent market conditions have been challenging, but assured that it has been taking important and measurable steps to ensure that the company continued to outperform peers and expand market share while continuing to cut costs and increase profitability.

OCM last week asked for a special meeting to vote on a new board slate after Micrel adopted the "poison pill" provision, reported the Associated Press, citing a U.S. Securities and Exchange Commission (SEC) filing. The "poison pill," or a shareholders rights plan, generally attempts to make an unwanted takeover more expensive for the buyer. Micrel said the poison pill was brought about by the acquisition of a 15-percent stake in the company.

Obrem owns 10.7 million Micrel shares, representing a 14.9 percent stake in the company.

According to the AP report, OCM had intended to remove the board's five current directors, increase the size of the board to six members and elect OCM's proposed board slate. OCM also said it wanted to cancel the poison pill, believing it will not "maximize or enhance shareholder value." Obrem has previously urged Micrel to explore strategic alternatives, including a sale of the company, stating its shares are "substantially undervalued."

Exchange of words
Immediately following Micrel's open letter, OCM also wrote fellow shareholders expressing disappointment that the "Micrel management has chosen to attack" OCM.

To Micrel's claim that OCM's nominees have limited IC industry and operating experience, the shareholder cited that two of its nomineesKeith Kolerus and Bill Bradfoodcollectively have 60 years of semiconductor experience in top leadership roles.

OCM also clarified that it is not proposing to oust CEO Ray Zinn, but only wish to instate its nominees to take action to maximize stockholder value. It added that it is not pursuing any action that will disrupt the company's operations.

Besides Bradford Kolerus, Obrem also nominated managing member Andrew Rechtschaffen with Eric Gomberg, Ben Goren and Keith Gollust.

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