Monday, December 14, 2009

ON Semiconductor pays cash for cash. (ONN, CAMD)

On Semiconductor (ONN) announced they're buying California Micro Devices (CAMD) for $4.70 per share, or approximately 106$million.

Of course, that includes CAMD's balance sheet cash of $47million, effectively valuing the rest of the company at 1.2times sales.  ONN is valued at 2times sales and 13times earnings (no earnings at CAMD, just losses), so this transaction will be immediately accretive.  

"PHOENIX & MILPITAS, Calif.--(BUSINESS WIRE)--ON Semiconductor (Nasdaq:ONNN) and California Micro Devices (Nasdaq:CAMD) today announced the signing of a definitive merger agreement pursuant to which ON Semiconductor will acquire California Micro Devices (CMD) through a cash tender offer of $4.70 per share. With net cash, cash equivalents and short-term investments of approximately $45 million at the end of November 2009, the transaction value of CMD represents an enterprise value of approximately $63 million and an equity value of approximately $108 million, based on common stock outstanding and issued."

Wait for it, wait for it, BAM!  The "shareholder lawsuits" begin to fly.  I swear, are these things fully automated? The speed with which they appear is stunning.  These lawyers point out that since one Wall Street analyst has a target of $6 for CAMD, a deal price less than that is a breach of fiduciary duty by CAMD's board.  Good luck fella's.

Levi & Korsinsky, LLP Investigates Possible Breach of Fiduciary Duty by the Board of California Micro Devices Corp. - CAMD

Stull, Stull & Brody Announces Investigation on Behalf of Shareholders of California Micro Devices Corporation

"The current investigation concerns the price to be paid by On Semiconductor to California Micro shareholders and the process by which California Micro’s Board of Directors is addressing the transaction, including whether California Micro’s Board of Directors breached its fiduciary duties to the Company’s shareholders by agreeing to sell the Company at an unfair price. Whereas California Micro’s shareholders will receive $4.70 per share under the terms of the proposed transaction, at least one analyst has set a price target of $6 per California Micro common share, representing a significant potential discount to On Semiconductor."

Copyright 2009 AlphaNinja

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