Vishay, International Rectifier Cat Fight Continues

The cat fight between Vishay Intertechnology Inc. (VSH) and International Rectifier Corp. (IRF) appears destined to continue until the last vote is counted at IRF's annual meeting on Friday. Vishay was on the offensive again yesterday, issuing an open letter to IRF shareholders criticizing the company for refusing to discuss a possible acquisition.

Vishay on Monday said it would consider raising its current $23 a share, $1.7 billion offer for IRF if the power management component maker would enter into negotiations with it and could show it was worth a higher price. International Rectifier responded by calling the offer "illusionary," and a "ploy" designed to gain favor with its shareholders. It again hammered on Vishay for not having cash or financing to fund an acquisition.

In Tuesday's letter, Vishay said the response from IRF was "consistent with its conduct so far," and that the company's board of directors was shirking its responsibilities by refusing to enter into discussions.

-- David Shabelman

See Oct. 7 letter from Vishay to IRF shareholders
See Oct. 6 post from Tech Confidential

Comments

[Tom Armistead:]

I am long Vishay. I wish they would drop the International Rectifier bid and stick to their knitting.

2008 Oct 08 07:09 AM

[Pierr Johnson:]

I agree that both companies should be left to stick to their knitting. I have covered both Vishay and International Rectifier for over a decade and knew previous managements of both companies pretty well. And I eagerly awaited IRF's restated results in plotting the purchase of its depressed stock. No sooner were they here than Vishay pounced with a paltry premium.

Surely IRF was brought to its knees striving to seek the highest value in its franchise through serious accounting and business malfeasance. That said, the reporting mechanisms are back in place and a new management presides over a higher value Power IC and Discrete franchise that is intact. Even in its weakened state, this business model is inherently more profitable than that Vishay has so capably pursued over the years. It requires higher levels of investment and different channels that target different sorts of customers.

It is not clear to me why Vishay is expending such effort to pursue what seems clearly to be an ill-conceived business combination. Granted, IRF shares are severely depressed, and the accounting scandal has strained its business. Yet a cheap price alone hardly justifies this intervention in IRF's turn-around. And given its size and difficulty, it could very well gum up Vishay's execution as well. For now, I am on the side lines (and unable to vote).

2008 Oct 09 12:38 PM