VLSI Technology Inc said Thursday that it had finally reached an agreement with Philips Electronics NV that will give the Dutch giant access to confidential information about the San Jose-based chip maker in an attempt to come to terms on a takeover agreement. In return, Philips has had to sign a standstill agreement, pledging that it will suspend all activities related to its hostile $777m takeover bid for VLSI – which has so far not seen very many shares tendered anyway.
Since rejecting Philips’ bid outright, VLSI has entered into similar agreements with other potential suitors. The move by Philips, which won’t allow it to purchase any additional VLSI shares without the approval of the VLSI Board until May 10, is seen by many as a sign that the company is willing to consider a beefed-up offer for VLSI. Another possibility VLSI said in a statement, is that multiple interested parties could end up involved in an auction for the company.
For now, VLSI will provide Philips with access to non-public information and company management in due diligence sessions that were set to take place yesterday and today, with the opportunity to follow-up at a later date. VLSI has also pledged to release Philips from the standstill agreement if it signs an agreement with another party with respect to a merger or if a party other than Philips makes an unsolicited offer that VLSI’s board deems acceptable.
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