SAN FRANCISOVishay Intertechnology Inc.'s $23-per-share tender offer to acquire International Rectifier Corp. is too low and unlikely to succeed, an analyst said Tuesday (Sept. 30).
"Both management teams have very disparate opinions about IR's fair value, with IR focusing on its potential turnaround prospects in coming years and Vishay focusing on the past two years of poor performance," wrote Craig Berger, an analyst at Friedman Billings Ramsey & Co. Inc. (FBR), in a research report.
Vishay Monday appealed directly to IR shareholders after two bids to require the company were rejected.
Vishay commenced a tender offer to acquire all of the outstanding shares of common stock of IR for $23 per share in cash.
Vishay also proposed three new directors for IR and commenced litigation in the Delaware Chancery Court regarding the timing of IR's delayed 2007 and 2008 annual meetings and proposed bylaw amendments.
Berger said even if Vishay were to raise its offer again, the takeover would likely not succeed. Vishay seems reluctant to raise its bid high enough to close the deal, he said. Berger added that Vishay is also unlikely to gain seats on IR's board of directors.
Vishay last month made a non-binding, unsolicited proposal to acquire IR for $1.6 billion in stock. On Sept. 10, Vishay increased its offer to $1.7 billion. IR's board of directors rejected both proposals.
On Tuesday, IR said it mailed a letter to shareholders urging them to support board nominees proposed by the board of directors and to vote against board nominees and bylaw amendments proposed by Vishay. The letter was also filed with the U.S. Securities and Exchange Commission.
FBR maintained an "outperform" rating and $29 price target on IR's stock. The stock could retreat back to the $16 level, but the IR shares have attractive risk/reward dynamics, Berger said. Shares of IR traded at $18.45 in mid-morning trading Tuesday after closing Monday at $18.22.