VLSI Technology Inc has amended its shareholder rights plan in an effort to block the increasingly hostile takeover bid for the company mounted a few weeks ago by Philips Electronics NV. The amended plan now allows VLSI shareholders to buy shares at roughly half the market price if a third party acquires a stake over 10%, making a bid much harder.
Previously the trigger for the shareholder rights plan was set at 20%. Last week, Philips requested the VLSI board to remove the plan altogether, and said that if it wasn’t removed, it would fight to replace the board members with its own nominees.
Nevertheless, VLSI says it continues to have an open mind over the bid. The amended plan it said merely seeks to protect the process that enables the board to evaluate Royal Philips’ offer. Philips opened an all-cash tender for VLSI on Friday, offering $17 a share, 58% above the stock’s closing price of $10.75 on Thursday 25th February, the day before its offer. The tender expires on April 1. VLSI says it will respond to the offer on or before March 18.
