Oak Technology Inc, the provider of high-performance semiconductors for the optical storage, consumer electronics and digital office equipment markets, said that its chairman of the board, David Tsang, has launched a bid to buy the company outright. Tsang has issued a proposal to acquire all of Oak’s outstanding common stock at a price of $4.50 per share-a premium of 13.4% over Tuesday’s closing price of $3.9688, and a 55% premium over the three-month average closing price. Like most in the semiconductor industry, the Sunnyvale, California-based company has seen some tough financial times this year, posting net income for fiscal 1998 that plunged about 75% to $5.9m, with the subsequent resignation of its chief financial officer. In the past year, the company’s share price has dropped more than 50% from it’s 52-week high of $9 and Tsang could be looking for a bargain. In a letter outlining his proposal, Tsang admits that the near-term outlook for the company continues to be difficult, and says that one of its main problems is attracting and retaining key employees. The chairman already owns roughly 8.3% of the stock and said he thinks a management-led buyout is in the best interest of the company, its shareholders and customers. Oak has set a meeting of the board of directors for later this week to consider the appointment of a special committee of independent directors to review the proposal. In his letter, Tsang said he’s formed an investment group to pursue the proposal and that he has secured the participation of Hambrecht & Quist Asia Pacific – whose chairman, Ta-Lin Hsu, is also a member of the Company’s Board of Directors – and Advanced Semiconductor Engineering Corp. No other members of the board are known to be involved in the offer, Oak said, and it appears to have come as a surprise to the members of the board that aren’t involved. The proposal, which will be kept on the table until December 14, says the deal would likely be structured as a tender offer to the company’s stockholders. Further terms and conditions of the deal were not disclosed.
