PHG is interested in buying VLSI.............I wonder what Umesh thinks............
utch Philips Offers To Buy VLSI
Technology
By Duncan Martell
PALO ALTO, Calif. (Reuters) - Dutch conglomerate Philips Electronics NV
early Friday made an unsolicited offer to buy Silicon Valley semiconductor maker VLSI Technology
Inc. (Nasdaq:VLSI - news) for $776.9 million in cash, as it seeks to bolster its presence in the U.S.
chip market.
Philips, whose semiconductor business had 1998 revenue of about $3.56 billion, said it offered to
pay $17 a share for all of VLSI's 45.7 million shares outstanding -- a premium of about 60 percent
based on VLSI's closing stock price Thursday.
A Philips spokesman called the offer a ''fair price,'' while officials from VLSI did not return
telephone calls seeking comment on the bid.
The proposed acquisition would add VLSI's chip business for the wireless industry -- which has
Swedish cellular phone maker Telefon AB L.M. Ericsson Ericsson as its largest customer -- to
Philips' own chip business. There is little, if any product overlap between the two companies,
analysts said, adding that it would make sense for VLSI to be bought given its moribund stock price.
''They don't have the critical mass to operate on a stand-alone basis,'' said analyst Ashok Kumar at
Piper Jaffray in Minneapolis. ''Either they have to find an alliance partner or get taken out.''
VLSI climbed $4.56 to $15.31 in midafternoon trading on the Nasdaq. The stock had been trading
in a range of about $6 a share to about $13 a share since September, as stocks of other chipmakers
such as Linear Technology Corp. (Nasdaq:LLTC - news) and Intel Corp. (Nasdaq:INTC - news)
have soared.
San Jose, Calif.-based VLSI began as a maker of chipsets -- the boards in PCs that hold the guts of
personal computers -- until Intel got into the business and forced VLSI to exit. It was no match for
the world's largest chipmaker.
VLSI then turned its sights to Apple Computer Inc. (Nasdaq:AAPL - news) and began making
chipsets for the maker of the Macintosh computers. But when Apple sputtered and sales plummeted,
VLSI again was struggling.
Its current focus on selling application specific-integrated circuits, or ASICs, is bearing fruit, analysts
said, noting that perhaps even International Business Machines Corp. (NYSE:IBM - news), STM
Microelectronics or Texas Instruments Inc. (NYSE:TXN - news) could emerge as rival bidders for
the company.
''It's been highly speculated for several quarters that they were on the block; it was just a matter of
time,'' said Hans Mosesmann, an analyst at Prudential Securities in Palo Alto, Calif. ''They have
some products that will be useful for Philips in consumer applications.'' |
