Robbins LLP: Acquisition of Micrel, Incorporated (MCRL) by Microchip Technology Incorporated (MCHP) May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Micrel, Incorporated (NASDAQ: MCRL) by Microchip Technology Incorporated (NASDAQ: MCHP). On May 7, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Microchip will acquire Micrel. Under the terms of the agreement, Micrel shareholders will receive $14.00 for each share of Micrel common stock. Micrel shareholders may elect to receive the purchase price in either cash or shares of Microchip common stock.
Is the Proposed Acquisition Best for Micrel and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Micrel is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $14.00 merger consideration represents a discount of 3.2% based on Micrel’s closing price on April 8, 2015. This premium is significantly below the average one month premium of nearly 32.2% for comparable transactions within the past five years. Further, the $14.00 merger consideration is below the target price of $15.00 set by an analyst at Sidoti & Company LLC on April 24, 2015. In the last three years, Micrel traded as high as $15.72 on March 24, 2015, and most recently traded above the offer price – at $14.20 – on April 30, 2015.
On April 23, 2015, Micrel reported strong earnings results for its first quarter 2015. Revenues were $58.0 million, a slight increase over the fourth quarter 2014. Micrel beat consensus analyst estimates for EPS Adjusted and Net Income Adjusted in the last two out of four quarters. In commenting on these results, Micrel President and Chief Executive Officer Ray Zinn remarked, “I am quite pleased with our overall performance in the first quarter which included strong earnings, reduced operating expenses and solid bookings. At the top line, first quarter revenues of $58.0 million increased slightly compared to the prior quarter and were driven by the strength in sales of Micrel’s Industrial and Automotive end markets, partially offset by lower demand for our Enterprise/Cloud Infrastructure products. At the bottom line, non-GAAP earnings of $0.08 per diluted share resulted from initiatives implemented in the second half of last year to streamline our operations and improve our cost structure. These initiatives resulted in a sharp reduction in total operating expenses during the first quarter and helped expand operating margins to 6.9% — a three percentage point improvement over the prior quarter.”
In light of these facts, Robbins LLP is examining Micrel’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Micrel shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Micrel shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.