Blogs & Comment

Gennum sweetens the pot for Tundra

An update to my recent feature storyon Gennum‘s proposed acquisition of Tundra Semiconductor: as I reported, the initial price tag of $4.43 per share was indeed too good to be true.
On Friday, Gennum and Tundra announced an amended offer that jacks up the value of the deal by some 31%, boosting the cash-and-share deal’s purchase price to $112 million from approximately $86 million when it was first announced on Mar. 19. Now Tundra shareholders are being offered $5.81 in cash or 1.1679 common shares of Gennum (or some combination of the two), up from $4.43 per share or 1.1575 Gennum shares. Also, current Tundra shareholders are expected to end up owning about 23% of the combined company, versus 18% under the previous offer.
Why the sweetened pot? Clearly executives heard from institutional shareholders in the last couple of weeks that the deal undervalued Tundra:

We considered a number of factors including the feedback that we have received from Tundra shareholders,” said Gennum spokeswoman Robin Valtonis on why Gennum raised the bid…. ” We believe that the increased offer will assist in ensuring a successfulcompletion of the transaction.“(from the Financial Post)

Brian Piccioni, an analyst atBMO Capital Markets, remains unconvinced . “We still believe it is completely inadequate, although somewhat less inadequate than before,” he wrote in an e-mail to me this morning. “Ultimately, it is up to the shareholders to decide.”
The shareholder meeting is set for Friday, May 8.