Cirrus Logic (CRUS) Shareholder Says He Wants Control of the Company
Share price up to 11 3/16(10.49%) at the close. Look for high teens. Good post from Bosco at
exchange2000.com
Now the news.
Bloomberg News
May 5, 1998, 12:15 p.m. PT
Cirrus Logic Shareholder Says He Wants Control of the Company
Fremont, California, May 5 (Bloomberg) -- Plastics industry
executive Alfred Teo said he wants to take control of struggling
semiconductor maker Cirrus Logic Inc.
Teo and his wife Annie have been boosting their stake in
Cirrus in recent months, becoming the company's largest
shareholders with about 9.4 percent of the chip maker's stock.
Cirrus is ripe for a takeover because the company's shares
have tumbled this year, Teo said. Cirrus lost money in its 1996
and 1997 fiscal years, hurt by falling prices for graphics chips
used in personal computers and large restructuring charges. The
company returned to profitability in fiscal 1998 by selling more
chips used in PC disk drives and other devices.
''I would love to (take control of Cirrus) because the stock
is dirt cheap,'' said Teo, who is chairman and president of Sigma
Extruding Corp., a plastics company in Lyndhurst, New Jersey.
''There are a lot of angry shareholders out there.''
Cirrus Logic late yesterday said it has put in place a
shareholder rights plan designed to thwart a hostile takeover.
Like most ''poison pill'' defenses, Cirrus Logic makes it
prohibitively expensive for an outsider to gain control of the
company without consent of its directors.
''They are one step ahead of me,'' Teo said of the move.
Teo said he is willing to work with Cirrus management on
improving the company's performance. He said he plans to meet
with executives at Cirrus's Fremont, California, headquarters
next week to discuss various options.
In filings with regulators about his holdings of Cirrus
shares, Teo had said that he didn't have any plans to pursue a
merger or liquidation of Cirrus as a result of his investment.
Cirrus Logic Chief Financial Officer Ron Shelton declined to
comment on whether Teo was trying to take control of the company.
He said Cirrus adopted the shareholder rights plan to protect
shareholders during ''any unsolicited acquisition attempts.''
''This is pretty standard,'' Shelton said.
If he gains control of the company, Teo said he would
consider trying to improve its business, merge with another
company, or sell Cirrus to another firm. Teo said he has a buyer
in mind, but he declined to name it.
Cirrus Logic shares were unchanged at 10 1/16 in late
trading. They have fallen about 40 percent since September.
''It's a no-brainer'' to buy Cirrus right now because the
stock is so depressed given the company's assets, Teo said. About
40 percent of Cirrus's shareholders support his takeover bid for
the company, Teo said, even though he hasn't advertised it.
Buying Cirrus would be a departure for Teo, who runs Sigma
and a myriad of related subsidiaries. Closely-held Sigma has
about $800 million in annual sales, Teo said.
Cirrus said the rights plan it announced yesterday is
designed to make sure that shareholders receive fair treatment in
a takeover and to prevent ''abusive tactics'' to gain control of
the company without paying a fair price for the shares.
The plan essentially give other Cirrus shareholders the
right to buy $120 worth of Cirrus shares for $60 if any person or
group accumulates 15 percent or more of Cirrus stock, Shelton
said. That would dilute the large shareholder's stake.
The plan is designed to give Cirrus directors bargaining
power in any negotiations with a buyer, Shelton said.
Cirrus reported net income of $36.5 million, or 52 cents a
diluted share, in the 1998 fiscal year ended March 28. Excluding
one-time gains and charges, the company earned $32.6 million, or
47 cents a diluted share, compared with a loss of $46.2 million,
or 71 cents in the 1997 fiscal year. The 1997 results include
charges of $55.5 million for cutting jobs and other costs.
Cirrus lost $36.2 million, or 58 cents a share, in fiscal
1996. Those results include charges of about $12.8 million for
restructuring efforts and other costs. |
