Oak Technology, the high-performance semiconductor company which last month received an unsolicited proposal for a management-led buy-out, is leaning towards a rejection of the offer outright. A special committee set up to review the proposal from a group led by Oak’s chairman and CEO David Tsang has informed him that the offer is inadequate. In a letter to Tsang, the committee said that after careful review and consultation, it concluded that the price proposed by [the group] does not reflect the long-term value of the company. The letter also said that the company’s recent depressed stock price doesn’t take into account the benefits achievable from its new business initiatives and proposed restructuring measures. Thus the special committee sees the offer as not in the best interests of the company or its shareholders and feels that the pursuit of discussions on the matter would not be productive. It will therefore not recommend the deal to the full board of directors and has asked Tsang to withdraw the proposal. In the past year, the company’s share price has dropped more nearly 60% from its 52-week high of $9 and Tsang was seen by some to be looking for a bargain with his offer of $4.50 per share – just a 13% premium over the previous day’s closing price when the offer was made public on November 18. The shares closed at $3.7813 on Monday, down $0.3125.
