Simtek turned down CY's lowball offer a week ago. I expected a much quicker price drop but it still could go down to previous low levels for the year.
I always thought that CY was interested but was only interested in a lowball type of offer. I think the original deal on the 0.13 Sonos process was heavily favoring CY since all the money they essentially gave Simtek was for the development of the new chip and only 2 million in badly needed cash to survive the problems they were having with the chip they were working on at that time.
The real question is how to value Simtek. If you use a price to sales ratio and use 1-5 as your range, Simtek can be worth anywhere from $2 to about $10 per share. A middle of the road approach would be about $6 and is a price that most would have accepted right now. If Agiaga Tech is for real and they have the process in place to go to much higher chip densities, then Simtek is worth a heck of a lot more than than $10 but that is just a guess on my part. That is why the valuation on Simtek is so difficult and I feel that the CY offer was just to see how desperate the situation is there.
I think Simtek is more important to CY than they are letting on right now. I remember last year, I think it was at one of their analysts meetings, they extolled the virtues of nvsrams. They never mentioned Simtek at all. If they were not interested in acquiring Simtek, I think they would have given Simtek a lot of free publicity with this and with their press releases about their progress on the SONOS process. Then, they could have sold their present stake at a nice profit. But that hasn't happened. I think CY tried to steal Simtek at the present low price. I hope their next offer, if there is one, will better reflect what they think they really should be paying for Simtek. The fact that CY did not mention Simtek at all in their annual report, to me, tells me that they are still interested and do not want to drive the price up. I think we will see another offer from CY, especially since their share price is recovering. When I start to see Simtek being mentioned in the appropriate releases by Cypress, that tells me that Cypress is no longer interested in buying Simtek and is trying to drive the share price up so they can make money off of the sale of their shares.
JMO though. Good luck.
Neal |
