The board of directors of Ramtron International Corp. (Nasdaq: RMTR) has rejected the latest purchase offer from Cypress Semiconductor Corp. (Nasdaq: CY), but the two companies may be able to engage in a more civil discussion that could satisfy both parties, according to the details of a statement issued by the acquisition target.
Ramtron, a Colorado Springs, Colo.-based developer of specialized semiconductor components for the memory market, said its board reviewed Cypress's latest offer submitted one week ago and "concluded that the proposal of $2.48 per share of common stock does not reflect the intrinsic value of the Company and is not in the best interest of Ramtron shareholders."
William Howard, Ramtron's chairman, detailed in the statement why his company was turning down Cypress's acquisition offer. Howard said the company had seen improvements in its marketing position and has also resolved manufacturing problems associated with a foundry partnership that previously drove down sales. Further, the company has the potential for higher sales based on the possibility that its products could be sold into more market segments. Howard further said:
Having expanded capacity and addressed operational issues, the company is intensely focused on delivering superior service to its customers and distributors and driving demand creation, and is gaining traction with its customer-centric sales and marketing initiatives and new product introductions.
As a result, the Ramtron Board of Directors believes that Cypress' unsolicited proposal fails to reflect the Company's strengthened competitive position, F-RAM intellectual property and deep know-how, and strong prospects for long-term growth, as well as the progress being made toward expanding the Company's product portfolio beyond specialty memory products to also include integrated semiconductor solutions.
Ramtron doesn't seem averse to a transaction with Cypress or any other suitors, however. The company said it will begin to explore "strategic alternatives" that may include a sale of the business or continuation of its current growth plans. Cypress, it said, "has been invited to participate in this process."
If Cypress really wants Ramtron, this sounds like a call to jack up its current offer of $2.48 per share. As I pointed out in a previous blog, it is possible for Cypress to purchase Ramtron. Despite the strengths highlighted in the press statement, Ramtron's board of directors seem to realize they don't have a strong enough hand due to the recent weakness in the company's performance and may be willing to entertain the prospect of being acquired.
In my opinion, the ball is back in Cypress's court. It can close the deal, but it will have to jack up the offer nicely and work from behind the scenes to eliminate some of the acrimony that has seeped in as the two parties bargained over the last year or so. If Cypress fails to make its move soon, it is possible other suitors may step in, sparking a bidding war.