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IR turns down Vishay's takeover offer

Posted: 02 Sep 2008 ?? ?Print Version ?Bookmark and Share

Keywords:takeover bid? discrete semiconductor? passive component?

Fighting to stay independent, International Rectifier Corp. has dismissed the unsolicited takeover bid by rival Vishay Intertechnology Inc.

Last month, Vishay surprised the industry, by making a non-binding, unsolicited proposal to acquire IR for $1.6 billion in stock. If that deal goes through, the move would enable Vishay to corner the discrete chip business.

IR and Vishay are among the world's largest manufacturers of discrete semiconductors. Vishay is also a supplier of passive electronic components.

On Friday, IR rejected the Vishay's bid. The bid is not in the best interests of its shareholders, said Richard Dahl, chairman of IR.

"Vishay's proposal significantly undervalues the company and its future prospects when compared to the shareholder value realizable under our recently adopted strategic plan," Dahl said in a statement.

"The board believes that the proposal by Vishay does not value the company and its future prospects appropriately," he said. "In our judgment, IR shareholders will be better served by allowing management to move forward with its strategic plan. We believe that IR's valuation is still under the cloud of legacy issues."

Dahl did not elaborate, but IR has seen its share of troubles. Following some major management turmoil, IR recently named Oleg Khaykin as its new president and CEO. Khaykin was most recently the chief operating officer of Amkor Technology Inc.

Amid an accounting snafu, IR last year announced the resignation of Alex Lidow as CEO and as a director. Last year, IR discovered some accounting irregularities at a foreign subsidiary. These accounting irregularities include premature revenue recognition of product sales and other issues, according to IR.

Meanwhile, IR and Vishay are no strangers to each other. Over the years, Vishay has made several acquisitions. Those include Siliconix, Telefunken, the infrared components business of Infineon, General Semiconductor, Dale, Draloric, Sprague, Vitramon and BCcomponents, the former passive components businesses of Philips Electronics and Beyschlag.

In 2006, IR sold its Power Control Systems (PCS) business unit to Vishay for $290 million in cash. IR had put that business on the block. But then in April 2008, Vishay sold the automotive modules and subsystems business unit, as part of the acquisition of the PCS business of IR.

Meanwhile, Vishay would need to pay a higher price if it wants to acquire IR, observers said.

Vishay isn't likely to back away from the deal, however. A successful acquisition of IR would dramatically change Vishay's product offering, pushing the company deeper into the analog and integrated circuit market and furthering its goal of reducing its reliance on the passives sector.

- Mark LaPedus
EE Times

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