-- Sign up for the new EW Daily Newsletter, for latest news and products --

Discrete and passive semiconductor company Vishay Intertechnology said on Friday it has made a non-binding bid to International Rectifier (IR) Corp's board of directors to acquire all outstanding shares of IR's common stock for $21.22 per share in cash, for a total value of approximately $1.6 billion.

Vishay said its offer represents an approximate 13% premium over the closing price of IR's common stock of $18.82 on August 14, and a 20% premium over its 30-day moving average of $17.69.

IR declined to comment at this time, while a call to Vishay for further comment was not returned by press time.

Commenting on the offer, Romit Shah, senior VP of US semiconductor research at Lehman Brothers believes IR is unlikely to accept Vishay's offer based on the following: (1) June quarter earnings of breakeven (pro forma ex legal expenses) likely represent a cyclical bottom; (2) a net cash balance of roughly $10/share could be a good safety net in an extended downturn and will likely be used to buy back the stock and pursue acquisitions; (3) the offer implies an enterprise value to sales multiple of 1x versus a historical average of 2.5-3x.

"In our view, other competitors that could also potentially pursue IR include STMicroelectronics, Fairchild Semiconductor, and ON Semiconductor, though we note that a potential transaction would be dilutive," Shah concluded, in his report.

By Ann Steffora Mutschler, Senior Editor - Electronic News