Headline: Philips move for VLSI seen strategically sensible
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By Karen Iley
AMSTERDAM, May 3 (Reuters) - Philips' likely $1 billion
takeover of U.S. computer chipmaker VLSI Technology Inc (NASDAQ:VLSI)
may be small by the electronics giant's standards, but it is an
important technological step, analysts said on Monday.
"The timing is right. From a strategic, technological and
positioning point of view, as well as prospects, it looks very
good," said Lucien Albers van der Linden at Rabo Securities.
"It's not a big takeover but it still makes a difference in
terms of technology and complementary products," Bert Siebrand
of SNS Securities said, particularly as Philip's bigger
competitors such as Intel Corp (NASDAQ:INTC) and Samsung (KOREA:00830)
tended to be specialists.
The firms said earlier on Monday Philips had raised its bid
to $21 per share from an initial offer of $17.
"This is a good price. The initial offer of $17 was too
low," said Nationale Investeringsbank analyst Gert Jochems.
"Philips can easily afford this. They have huge proceeds
from the sale of PolyGram," Van der Linden said.
Philips gave no forecast for the predicted effect of the
takeover on its results, but analysts said the move should be
viewed as a long-term strategic step that came at the right time
with the semiconductor sector showing signs of a turnaround.
"We're going to bring VLSI within the semiconductor
organisation with the intention of improving results at both,"
Philips spokesman Jeremy Cohen said. "Our strategy is to fill
gaps in the portfolio and VLSI have ASIC technology with which
we're not doing a lot at the moment.
Philips also intends to make good use of VLSI's strong
digital portfolio.
"We are bringing in VLSI, a digital organisation, to
accelerate our own digital process," he added.
"There's a good fit. There's very little product overlap.
This is one particular area in which we are not too active, so
we can grow this," Cohen said.
The bid period ends on May 14 and VSLI has recommended its
shareholders accept the revised offer. Both firms expect the
takeover to be finalised soon after.
"We aim to get more than 90 percent (of VLSI stock) and that
would allow us to complete the transaction directly. The minimum
is 50 percent which would give us a majority...but with the $21
bid and the recommendation from the VLSI board we are aiming for
a very high tender," Cohen said.
Philips shares opened up 1.5 percent higher at 82.75 euros
in an overall softer market, but pared gains to trade at 82.60
euros at 0915 GMT.VLSI's stock closed on Friday at $18.875.
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