NEW YORK (Reuters) - Philips Electronics NV plans to launch a hostile bid for VLSI Technology Inc. (Nasdaq:VLSI - news) as early as this week
if the chipmaker does not respond to its $777 million takeover bid by Wednesday, said sources familiar with the situation.
The big Dutch electronics company also is preparing a proxy fight to throw out VLSI's board of directors by electing its own slate of nominees, said
the sources, who spoke on condition they not be identified.
''Philips is determined to see this through,'' said one source.
Philips last week disclosed an offer to buy San Jose, Calif.-based VLSI for $17 a share. The offer represents a 58 percent premium to VLSI's share
price before the announcement.
VLSI has acknowledged it received the offer, but has not commented on it. Sources said the company's board is scheduled to meet Wednesday to
consider the bid.
VLSI, which makes integrated circuits used in cellular phones and other products, did not return telephone calls Tuesday seeking comment.
Meanwhile, Philips is gearing up for a fight. The company, which is being advised by CS First Boston Corp. in recent days has hired proxy firm
Innisfree, sources said.
It also planned to run a full-page advertisement in Wednesday's San Jose Mercury News in the form of an open letter to VLSI's 2,200 employees,
one source said.
Philips declined to comment on its plans.
Shares of VLSI rose sharply after the offer was disclosed and have inched higher since then. Tuesday, VLSI stock gained 50 cents to $16.625 a
share on Nasdaq.
Wall Street traders specializing in takeover stocks view VLSI as vulnerable to a takeover, primarily because the company's entire six-member board is
up for re-election at its annual shareholder meeting this spring.
''They don't have much of a defense at all,'' said a trader who spoke on condition he not be identified.
In announcing its interest, Philips used a takeover strategy known as a ''bear hug'' in which a prospective buyer makes an offer public in an attempt to
pressure a target company into a deal.
Philips has said it plans to use VLSI as a platform for expansion in North America. VLSI was hurt last year by a slowdown in sales and the departure
of top executives.
Earlier Stories
Dutch Philips Offers To Buy VLSI (February 26)
Royal Philips Make Offer For VLSI Stock (February 26) |
