Shares of Newport Beach-based Conexant Systems Inc. soared on Tuesday to reflect a rival buyout bid by San Francisco’s Golden Gate Private Equity Inc.
Conexant’s stock closed up 18% on a recent market value of $203 million.
Golden Gate made a roughly $300 million offer on Monday, besting a previous buyout bid from Hauppauge, N.Y.-based Standard Microsystems Corp., which in January offered $284 million for the chipmaker.
Golden Gate’s offer values the company at $295 million to $309 million, or 4% to 9% higher than Standard Microsystems’ offer.
The unsolicited offer raises the prospect of a bidding war. However, Golden Gate’s bid is subject to a look at Conexant’s books.
Conexant, a maker of multifunction office printers, digital picture frames, PC speakers and other devices, said the bid could led to what’s called a “superior proposal that’s in the best interest of shareholders.”
Standard Microsystems hasn’t said whether it will up its offer for Conexant.
“We continue to believe that the combination of Conexant and SMSC provides for a highly complementary merger of talent and technology that is in the interests of Conexant stockholders, customers and employees,” Chief Executive Christine King said in a statement. “We believe that SMSC and Conexant together have the opportunity to take advantage of economies of scale and drive profitable growth, and that our proposal would provide Conexant stockholders with the opportunity to participate in the future success of the combined company.”
It appears that the original agreement between Standard Microsystems and Conexant “remains in effect,” the company said, until Conexant gives the green light to accept other “superior” proposals.
Standard Microsystems has some $160 million in cash on hand, which doesn’t provide a great deal of wiggle room to boost the cash portion of the deal, which totaled $92 million.
Standard Microsystems makes chips for disk drives, keyboards, Universal Serial Bus ports, networking devices, portable electronics and other products with industrial uses.
The interest in Conexant comes after a turnaround that started with the 2008 arrival of Chief Executive Scott Mercer.
Conexant has reworked debt, sold stock and debt, sold a chunk of land near its headquarters and done a handful of patent sales.
Mercer’s also nixed underperforming products, shed units that weren’t profitable or growing and made small buys to get into markets set to grow.
After the close of trading on Monday, Conexant reported results for the December quarter, but it didn’t give an outlook for the current quarter or hold a conference call with analysts.
Conexant posted a loss of $1 million, less than the $2.5 million loss analyst’s were expecting. It saw sales of $46 million, in line with Wall Street’s expectations.
