Vishay Intertechnology Inc. (Malvern, PA), announced that Dr. Felix Zandman, chairman and CEO of the company, has expressed disappointment with General Semiconductor's (Melville, NY) rejection of Vishay's proposal for a business combination of the two companies.
Under the Vishay proposal, first disclosed on April 2, 2001, Vishay would acquire General Semiconductor through a tax-free stock-for-stock transaction, in which the stockholders of General Semiconductor would receive one Vishay share for every two General Semiconductor shares.
The text of Dr. Zandman's letter to the Board of Directors of General Semiconductor follows:
I was very disappointed to receive your response to my letter of April 2, 2001, in which I proposed a business combination of our two companies. Vishay has proposed, subject to due diligence and other standard conditions, to acquire General Semiconductor through a tax free stock-for-stock transaction, in which the stockholders of General Semiconductor would receive one Vishay share for every two General Semiconductor shares. Based upon the relationship between the stock prices of our two companies since we first announced our proposal, we believe that the market is receptive to this proposed business combination and that it should be vigorously pursued.
As I stated in my letter, we are prepared to meet at any time with you and your management to discuss our proposal and to explain why we believe that the transaction is in the best interests of General Semiconductor, Vishay, our respective stockholders and our other constituencies. Frankly, I do not understand how you can reject our proposal without having had any serious contacts with us, without any substantive discussion and without negotiation. I fail to see how such inaction is consistent with your fiduciary duties to General Semiconductor and its stockholders, let alone how you can dismiss our offer as not being in the best interests of stockholders.
Let me emphasize again why we believe a business combination between Vishay and General Semiconductor makes so much sense.
- Our product offerings are complementary. Combining the two will create the premier line of discrete electronic components, from passives devices to signal processing circuits to power regulators and voltage rectifiers.
- In combination with Vishay, General Semiconductor will be able to pursue product development in emerging MOSFET technologies. As we have indicated to you, our tests have shown that General Semiconductor's trench MOSFET products are currently infringing on the patented technology of our subsidiary. Our subsidiary does not intend to ignore such infringement, and will take all required action to protect this important intellectual property asset.
- The market for electronic components has softened, as evidenced by first quarter results across our industry. To maintain and enhance stockholder value in these uncertain times requires a renewed focus on cost-cutting, operational efficiencies and product synergies. The combination of our operations will provide opportunities for achieving these objectives that are not available to General Semiconductor on a stand-alone basis.
- Vishay has a strong balance sheet with a net cash position, notwithstanding the current industry slowdown. This balance sheet will enable the combined company to pursue opportunistic acquisitions and capital expansion that are likely foreclosed to General Semiconductor in its weaker financial circumstances.
We believe that there is strong stockholder support for a proposal to combine our companies. We are confident that General Semiconductor stockholders want their board to seriously consider our proposal, with diligence that must include in-depth discussions and negotiations between our two companies.
I again invite you promptly to arrange a meeting with us to explore the merits of our proposal. But if this board is unwilling to do so, then allow stockholders the opportunity to elect one that will. As a stockholder of General Semiconductor, we are prepared to propose an alternative slate of directors at the company's upcoming annual meeting that will be committed to a fair and thorough evaluation of our proposal consistent with the directors' fiduciary duties. The by-laws that you have adopted preclude us from presenting our slate at the meeting. But you can amend those by-laws now, adjourn the meeting to allow for adequate circulation of our materials and let the stockholders decide.
I look forward to hearing from you.
Very truly yours,
Dr. Felix Zandman
Chairman and Chief Executive Officer
