A Battle Dripping With Irony by Neil A. Martin
Highlighted companies: ASM International (ASMI), Mellon Financial Corp. (MEL)
Summary: The Mellon hedge fund (MEL), which owns about 8% of ASM International (ASMI), wants the company's to spin-off its money-losing chip-making operations from its highly profitable semiconductor-assembly and packaging-equipment division. Hedge-fund chief Mickey Harley: "Failure to achieve long-promised synergies between the two businesses has eroded investors' confidence." He claims to have the support of 30% of shareholders. Arthur del Prado, president and 22% owner of ASMI, says he wants to maintain the integrity of ASMI's two main operations, especially since its chip division recently went profitable: "To split the company now would be to squander our investment over the years and seriously jeopardize the continued release of value from our chip-equipment-making operations." Tomorrow the two sides will face-off at an extraordinary shareholders meeting Monday near Amsterdam. Even if Mellon activists carry the day and the nonbinding resolution is approved, indications are that management will reject it, forcing a court-battle. Barron's: Regardless of what happens, holders of ASMI should be winners: ASMI shares closed Friday at $21.34, a 52-week high. The chip-equipment division is now profitable, and new digital technologies promise gains; continuing profitability should fuel the stock price -- bulls see another 10%-to-15% rise over the next year. And if the chip operations are sold, that would produce some sort of payout for shareholders.
Related: More Proof Semis Headed in Right Direction • Jim Cramer's Take on MEL