Despite a larger bid from a group led by China Resources Holdings Co.'s semiconductor arm and Hua Capital Management Ltd., Fairchild Semiconductor has announced that it will accept the proposal initially agreed upon with ON Semiconductor.
After it was announced that ON Semiconductor would acquire Fairchild Semiconductor for $20 per share in an all cash transaction valued at approximately $2.4 billion, the aforementioned Chinese consortium submitted an unsolicited acquisition proposal for $21.70 per share, for a total value of $2.46 billion.
A statement released by Fairchild Semiconductor notes—after conducting a review and considering the advice of its legal and financial advisors—that the Chinese proposal wouldn’t necessarily be a “superior proposal,” as defined in Fairchild’s Agreement and Plan of Merger with ON Semiconductor Corporation/
"As previously announced on November 18, 2015, Fairchild entered into an Agreement and Plan of Merger with ON Semiconductor (the "Merger Agreement"), under which a wholly owned subsidiary of ON Semiconductor has agreed to acquire all of the outstanding shares of Fairchild common stock for $20.00 per share in cash. Fairchild remains subject to the Merger Agreement and Fairchild’s board of directors has not changed its recommendation in support of the Merger Agreement," it said in the release.
In a Bloomberg article posted on Oregon Live, Kevin Cassidy, an analyst at Stifel Nicolaus & Co., commented on the decision.
"Fairchild's board probably thought they'd get a better-run company if they took the ON offer," he said.
Which, according to Cassidy, meant accepting the lower, despite the fact that it was lower.
View the Fairchild press release.
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