California firm rejects Vishay's sweetened bid

A California competitor has rejected Vishay Intertechnology Inc.'s unsolicited buyout offer of $23 a share, saying it "significantly undervalues" the company's future prospects.

With bad blood already simmering between the Malvern semiconductor-maker and International Rectifier Corp., its takeover target from a deal early last year, Vishay said yesterday that it vowed to present its all-cash offer directly to International Rectifier stockholders at the annual meeting Oct. 10.

Separately, Vishay said it had formalized its attempt to place three members on International Rectifier's board by filing a preliminary proxy statement with the Securities and Exchange Commission.

Vishay owns 1,100 shares of common stock of the target company, or less than 1 percent, according to the proxy filing.

Vishay also said it planned to seek stockholder approval of certain amendments to International Rectifier's bylaws, including requiring International Rectifier to hold its 2008 annual meeting to elect Class II directors by Dec. 21.

International Rectifier is fighting back by urging its shareholders to reject Vishay's nominees and reelect the three board members whose terms are about to end.

"Because $23 per share is not a reasonable starting point for negotiations, we also decline to engage in discussions regarding a sale to Vishay," International Rectifier board chairman Richard J. Dahl said in a letter released yesterday to Vishay executives.

Plus, the takeover target, based in El Segundo, Calif., says it has a new strategic plan to deliver to shareholders.

Vishay said it would soon begin its tender offer to purchase all shares of International Rectifier, which makes power semiconductors used in consumer appliances, automobiles and computers.

"Vishay has chosen to employ heavy-handed and disruptive tactics in its efforts," Dahl said in the letter, adding: "All to pressure the board and our stockholders to sell the company at a bargain price."

Last Wednesday, Vishay raised its all-cash takeover offer to $1.7 billion, after an earlier bid for $21.22 a share, or $1.6 billion, was rejected.

Vishay founder and executive chairman Felix Zandman said last week that the "increased all-cash proposal provides International Rectifier's stockholders with an opportunity to realize significant premium value for their investment" in the company. He said the combined company would offer customers a broader range of technology products.

Vishay spent $290 million to buy International Rectifier's power-control-systems business early last year. Since then, the two companies have been in dispute over whether International Rectifier misstated forecasts for some divisions of the systems business.

Vishay subsequently sold the automotive modules and subsystems business units, but contended that it had suffered a $50 million loss, International Rectifier said in a public filing. It also said in the filing that the accusations had no merit.

Vishay shares closed down 12 cents yesterday, or 1.66 percent, at $7.11 on the New York Stock Exchange. Shares of International Rectifier were up 20 cents, or 0.94 percent, to close at $21.48.