Headline: VLSI opens books to potential bidders-sources
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By Robin Sidel
NEW YORK, March 28 (Reuters) - Computer chipmaker VLSI
Technology Inc. (NASDAQ:VLSI) is providing confidential financial
information to potential buyers, but negotiations to give
similar data to hostile bidder Philips Electronics NV (AMS:PHG)
broke down over the weekend, sources familiar with the
situation told Reuters Sunday.
Talks with the Dutch electronics giant, which last week
appeared to be moving forward, fell apart Saturday over terms
of the proposed confidentiality agreement, said the sources,
who spoke on condition of anonymity.
The collapse of talks means the other potential bidders
will get the chance to value VLSI based on internal
information, while Philips must rely solely on data that has
been released publicly.
San Jose, Calif.-based VLSI declined to comment. A U.S.
spokesman for Philips also declined comment.
VLSI earlier this month rejected a hostile $777 million
cash bid from Philips, saying the $17 a share bid was
inadequate. VLSI said, however, it would explore alternatives
and expressed a willingness to sit down at the bargaining table
with Philips and other interested parties.
VLSI believes it may receive higher offers if potential
bidders look at its books.
Philips is eager to buy VLSI as part of a planned expansion
in North America. VLSI makes chips used in wireless
communications, computer networking and consumer digital
entertainment.
In addition to launching the hostile bid, Philips has said
it will seek to oust VLSI's board of directors.
Investment bankers and attorneys for VLSI and Philips spent
last week hammering out details of a confidentiality agreement
and VLSI's board of directors held a special meeting Thursday
to discuss the anticipated pact.
But those discussions unexpectedly broke down after Philips
refused to accept terms that called for it to delay the
takeover attempt while it reviewed VLSI's books, the sources
said.
In the meantime, VLSI has signed confidentiality agreements
with multiple other parties, some of which already have
received access to confidential information, the sources said.
The identities of those parties were not immediately
disclosed, but rumored potential bidders include STM
Microelectronics, International Business Machines Corp. (NYSE:IBM)
and Texas Instruments Inc. (NYSE:TXN). Those companies have
declined to comment on the speculation.
VLSI has not set any deadlines for potential bidders and
does not view the developments as an auction of the company,
the sources said. They also did not rule out the chance that
Philips and VLSI could resume discussions about a
confidentiality agreement.
Shares of VLSI have traded above the $17 a share bid on
views the company will be sold at a higher price. Wall Street
experts have been skeptical that other bidders would emerge and
generally expect cash-rich Philips to win its target for about
$20 a share, or $914 million.
Copyright 1999, Reuters News Service |
