Vishay & IR Exchange Letters Regarding Vishay’s Proposed Increase Of Per Share Offer For IR

October 07, 2008 by Jeff Shepard

Vishay Intertechnology issued a statement to stockholders of International Rectifier Corp. (IR) with respect to the upcoming election of Directors at IR’s delayed 2007 Annual Meeting, scheduled to be held on October 10, 2008.

Vishay stated that it continued to believe that its $23.00 per share cash offer represents "full, fair and immediate value" for IR stockholders. Vishay believes that its premium offer is far superior to what IR could hope to achieve on its own in the foreseeable future through execution of its three-year turnaround ‘roadmap.’ Vishay stated that it remains "highly skeptical about the dramatic improvement" reflected in IR’s most recent business plan, which was announced shortly after Vishay publicized its initial acquisition proposal.

Vishay stated, "If International Rectifier can, through good faith negotiations, demonstrate to Vishay that a further price increase is justified, Vishay would be willing to improve its offer. In this regard, Vishay would seek to obtain substantiation of International Rectifier’s new business plan, particularly the $60 million reduction in cost of goods sold within two years and the projected substantial increase in revenues and gross margin."

IR responded to the suggestion by Vishay that it "would be willing to improve its offer" above $23.00 per share. Richard J. Dahl, Chairman of the Board of IR said, "Our shareholders should not believe Vishay’s latest ploy. With neither cash on hand nor committed financing, we do not believe that Vishay is in a position to provide ’immediate value’ as it has suggested. A hypothetical increase to an already hypothetical, highly conditional offer should be viewed as yet another attempt to distract shareholders from the serious risks of accepting Vishay’s nominees and bylaw proposals."

Vishay then issued an open letter to IR stockholders urging them to vote for what are described as "experienced and independent Director nominees."

IR responded to the "open letter to shareholders" by reiterating the "inadequacy and the many flaws" in Vishay’s offer and examining IR and Vishay’s recent conduct. The IR response asked, "What has IR done over the last 6 Months?" IR states that it has appointed a new CEO and management team; appointed four new "highly-qualified" directors to the board; started executing on its strategic roadmap and shown "strong progress to date;" completed its restatement process; and thoroughly reviewed all of Vishay’s offers with advice from legal counsel and "found them to be inadequate in all respects."

IR then asked, "What has Vishay done over the last 2 Months?" According to IR, Vishay "Started the process by proposing to acquire the company at a 13% premium to a near all-time low while at the same time threatening meritless litigation relating to its PCS acquisition." Vishay is said to have "Launched one of the most conditional tender offers seen in recent times, without financing and including numerous subjective and immaterial conditions." IR states that Vishay attempted to entice IR shareholders with a "non-existent price increase" and that Vishay paid three "hand-picked designees $50,000 each to stand for election to IR’s board of directors." IR asked, "Where do their allegiances lie?"