Microsemi Corp. Chief Executive James Peterson said the chipmaker will pull its $548.7 million cash bid for Zarlink Semiconductor Inc. off the table at midnight on Sept. 22.
Peterson said his Aliso Viejo-based company is steadfast on the expiration date and isn’t interested in negotiating with Zarlink Chairman Adam Chowaniec.
Chowniec has mentioned there is a field of interested bidders but declined to name any in recent weeks.
“We have a very strong offer on the table,” Peterson said. “I’m not willing to extend it.”
The board of Otta-wa, Canada-based Zar-link has urged shareholders to reject Mic-rosemi’s bid, contending the offer “significantly” undervalues the company and is “inadequate” for share-holders.
The bid values Zarlink at $3.35 per common share, a premium of about 40% based on the closing price on the Toronto Stock Exchange July 19, the last trading day before Microsemi announced its offer.
Microsemi took the bid directly to shareholders after Zarlink’s board turned down two earlier offers, according to Peterson.
Zarlink’s shares have since risen nearly 50%, likely due to the attention the deal has brought.
Peterson often refers to himself as “Jimmy P” and commonly jokes with analysts and investors on earnings calls. He likened the latest turns in the deal to a “kabuki dance that we all must play.”
He downplayed Zarlink’s assertion earlier this month it had as many as 15 potential buyers.
“I’d love to meet them,” he said. “I’m willing to bet that eight to 12 of them are private equity firms that don’t have the funding. They’re not going to pay the premium that I’m offering.”
Potential Suitors
Zarlink hasn’t publicly identified any potential suitors but industry watchers have thrown out some big names, including San Diego-based Qualcomm Corp., Intel Corp. in Santa Clara, and U.K.-based Integrated Device Technology Inc.
A Zarlink spokesman declined comment.
Microsemi is Orange County’s third-biggest chipmaker by sales and reported about $520 million in revenue for the 12 months through October. It’s a frequent acquirer, and buys are key to the company’s current goal of doubling revenue.
Microsemi’s chips serve a variety of military, aerospace, consumer and industrial uses. Its products are built into satellites, digital televisions and other devices. Customers include Cisco Systems Inc., Boeing Co., Hewlett-Packard Co., Dell Inc. and Samsung Electronics Co.
Interest in Zarlink stems from the company’s inroads in the communications and medical markets—two key segments of Microsemi’s growth plan.
Zarlink makes chips used by telecommunications and cable companies for bundled voice, video, data and mobile services. It counts on the communications sector for about 80% of its business and the medical sector for most of the rest.
Its medical business makes ultra low-power radios for devices such as pacemakers.
• Headquarters: Aliso Viejo
• Business: chipmaker
• Founded: 1960
• Ticker symbol: MSCC (Nasdaq)
• Market value: $1.35B
• Notable: $548.7 million cash offer for Zarlink Semiconductor rejected by company’s board, pending with shareholders
Wait and See
For now it’s a wait-and-see game for Peterson, who has overseen nine acquisitions since 2009, including the $430 million buy of Northern California-based rival Actel Corp., Microsemi’s largest to date.
He said he expects to hear from Zarlink’s investment bankers in the next week or so if an alternative doesn’t present itself.
“They’ll start putting on the wooing hat,” said Peterson, who is pushing for a prompt nondisclosure agreement with Zarlink. “What (Zarlink chairman Chowaniec) needs to do is be a better leader and educate his board that they should sign an agreement with Microsemi.”
If the deal doesn’t work out, Microsemi will move on to other acquisition targets, according to Peterson.
“If they get a superior bid, I’ll tell them ‘well done,’ ” he said.
