Gennumhas ended its bid for Ottawa’s Tundra Semiconductor. Burlington, Ont.-based Gennum issued a press release this morningto announce it will not match the $120-million offer made April 27 by its larger U.S.-based rival, Integrated Device Technology ( Nasdaq: IDTI), which is based in San Jose, Calif. It seems another Ottawa-based company is poised to be swallowed by a larger U.S. firmunless a third interested party emerges.
Another rival bid is possible, says Brian Piccioni, analyst with BMO Capital Markets. “More likely than not, there will probably be a bid from some third party we haven’t heard of yet for Tundra,” Piccioni said, while also acknowledging he has no specific insights as to what company might make a play. “The IDT bid significantly undervalues Tundra, and I think most people in the industry would be aware of that. Plus, in an absolute sense, the amount of cash IDT is paying over the amount of cash that Tundra has in the bank is chump change.”
As of Feb. 1, Tundra has $63.4 million in cash and short-term investments on its balance sheet.
Tundra shareshave slumped in reaction, trading at $6.18 a little after noon. Earlier in the week the stock had climbed as high as $6.38.
Piccioni had opposed Gennum’s proposed deal, calling it “low-ball”, and didn’t believe Tundra’s institutional shareholders would have tendered their stock anywaynor is he sure that they will go for IDT’s all-cash offer of $6.25-per-share. But it helps that cash is on the table, he said, and not Gennum’s relatively illiquid stock.
According to an e-mail from Tundra Semiconductor, shareholder’ will vote on IDT’s offer has been set for June 19.
Feature story in Canadian Busines magazineabout Gennum’s initial Mar. 19 bid for Tundra.
April 20, 2009blog post on Gennum’s sweetened bid.
April 27, 2009blog post on IDT’s rival offer.
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