A frustrated U.S. company says it has been forced to make an official -- and hostile -- takeover bid for Ottawa's Zarlink Semiconductor Inc.
Microsemi Corp., which made a $3.35 a share takeover offer by letter to Zarlink's board last month only to have it rebuffed, issued a news release Wednesday saying a wholly-owned Canadian subsidiary will make that US$445 million bid official today.
After Microsemi's offer, Zarlink's board set up a committee to review all possibilities for the company and invited Microsemi officials to participate.
But the Irvine, Calif., company apparently didn't see this going anywhere.
"We are disappointed by Zarlink's board of directors' insistence on placing onerous restrictions on Microsemi that would have prevented us from presenting our attractive offers to Zarlink's shareholders and debenture holders," Microsemi CEO Jim Peterson said in the news release. "Under these circumstances, and in the absence of a more attractive alternative, Microsemi is compelled to take its offer directly to shareholders. Zarlink shareholders will receive a substantial premium, in cash, and without execution or macroeconomic risk."
Share and debenture holders have until Sept. 22 to tender their holdings.
Zarlink's shares on the Toronto Stock Exchange were up slightly today on the news, trading at $3.560, about where they have been since Microsemi issued its letter last month.
Zarlink officials couldn't be reached for comment this morning.
Zarlink is a fabless semiconductor design company which had net income of US$69 million on annual revenues of US$230 million for the fiscal year that ended March 25. It was created in 2001 when unified communications systems maker Mitel Corp. shed several divisions. By comparison, in its last quarter alone Microsemi had sales of US$207 million.
In its news release, Microsemi said it will offer to buy all of Zarlink's outstanding common shares, together with associated rights outstanding under the Canadian company's shareholder rights plan.
It would also pay $1,367.35 per $1,000 for all of Zarlink's outstanding 6 per cent unsecured, subordinated convertible debentures, which mature Sept. 30, plus accrued and unpaid interest.
The offers represent a 40 per cent premium over the closing price of Zarlink's common shares on the TSX on July 19, Microsemi said, and a 24 per cent premium over the closing price of the debentures.
"We are committed to building and strengthening Zarlink's business," Peterson said in the Microsemi press release, "and believe our offers provide a superior outcome for Zarlink's shareholders, debentureholders, employees, customers and the local economy ...We believe this proposed acquisition provides considerable growth opportunities, and greatly benefits the security holders of both companies."