Acquisition of PLX Technology, Inc. by Avago Technologies Limited May Not Be in Shareholders’ Best Interests
Robbins LLP are investigating the proposed acquisition of PLX Technology, Inc. (NASDAQ: PLXT) by Avago Technologies Limited (NASDAQ: AVGO). On June 23, 2014, the two companies announced the signing of a definitive merger agreement pursuant to which Avago will commence a tender offer for all outstanding shares of PLX common stock for $6.50 per share in cash.
Is the Proposed Acquisition Best for PLX Technology and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at PLX is undertaking a fair process to obtain maximum value and adequately compensate PLX shareholders.
As an initial matter, the $6.50 merger consideration represents a premium of just 9.4% based on PLX’s closing price on June 20, 2014. This premium is significantly below the median one-day premium of nearly 62% for comparable transactions in the past three years. Further, prior to the announcement of the merger, analysts at Roth Capital Partners and Craig-Hallum Capital Group LLC set a target price on April 22, 2014. In addition, PLX has traded above the merger consideration as recently as January 17, 2014, when the company’s common stock reached a high of $6.91 and closed at $6.74.
Further, on April 21, 2014, PLX released its financial results for the company’s first quarter ended March 31, 2014, reporting the company’s fifth straight profitable quarter. Specifically, PLX reported first quarter revenue of $24.8 million on higher gross profits and increased operating income over the previous quarter. In announcing the quarterly results, PLX’s President and CEO, David Raun, stated, “Based on current backlog, forecasts from customers, and resolution of the assembly issues, we expect all of our market segments to be up in Q2, driven primarily by Gen2 and Gen3 shipments. We are beginning to see an increasing number of Gen3 design wins go into volume production and we believe that this ramp will fuel our growth this year and in years to come.”
In light of these facts, Robbins LLP is examining PLX’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.
PLX 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.
PLX 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.