Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : VLSI Technology - Waiting for good news from NASDAQ !!! -- Ignore unavailable to you. Want to Upgrade?

To: Ram Seetharaman who wrote (5827)	3/19/1999 6:53:00 AM
From: Ram Seetharaman	Read Replies (1) \| Respond to of 6565

VLSI formally rejects Philip's offer: Friday March 19 2:31 AM ET VLSI Rejects Philips Offer, Seeks Options By Therese Poletti SAN FRANCISCO (Reuters) - VLSI Technology Inc. (Nasdaq:VLSI - news) Thursday rejected a $777 million hostile bid from the Dutch electronics giant Philips Electronics NV, but the computer chip maker left the door open for a higher offer or a merger with another company. In a statement, VLSI said it rejected Philips' $17-per-share offer based on presentations from financial advisers, but the chip maker said it believed ''interested parties,'' which could include Philips, will recognize ''the strong business potential'' of the company. In late February, Amsterdam-based Philips, one of the world's largest makers of electronics equipment, launched its offer for VLSI as part of a plan to expand its presence in North American semiconductor markets. Analysts were not surprised by VLSI's initial rejection of the Philips offer, and some said that VLSI was holding out for either a better offer from Philips or another bidder. ''I don't think they have any intent of rejecting it outright. ...They have to get it sold, it's in play. It's just a matter of finding the highest bidder at this point,'' said Dan Niles, an analyst at BancBoston Robertson Stephens. Arbitragers have already been betting on another bidder emerging, or a better offer from Philips. On the Nasdaq stock market, VLSI's shares closed Thursday at $18.93, higher than Philips' $17 per share bid. VLSI makes specialty chips principally used in wireless communications, computer networking and consumer digital entertainment. Analysts say its products would fit well with the Dutch company's product lines. The company said its board voted unanimously to reject the Philips offer and recommended the company explore options such as a merger, sale or recapitalization. It said alternatives could include negotiations with other companies, including Philips. The company's statement that it would consider a recapitalization of VLSI surprised some analysts, who said it could be a signal that VLSI chief executive Al Stein may be reluctant to let go of the company. VLSI said its financial advisers, Morgan Stanley & Co. Inc. and Hambrecht & Quist LLC, had determined that the Philips offer was inadequate. VLSI said it based its recommendation on several factors, including preliminary discussions with a ''number of parties'' as part of the evaluation of the offer, and on the company's improved financial condition. Industry sources have said that VLSI has been looking for a ''white knight'' to rescue it from the hostile Philips offer. Analysts said that there are a few likely candidates, but that they may not be able to offer a better deal in cash than Philips. The most widely mentioned contender is European semiconductor group STMicroelectronics NV, which has declined to comment on all speculation. ''There is probably a good fit between VLSI and STMicroelectronics, but the problem is that STMicro might have to do it in stock and it might be dilutive to its earnings per share,'' said one analyst who asked not to be named. ''Whereas to Philips, it is a drop in the bucket.'' Other possible candidates mentioned by analysts include Texas Instruments Inc. and International Business Machines Corp. VLSI is widely known to have held merger discussions with its rival LSI Logic Corp., but those talks collapsed about a year ago.