Zilog Aquired by IXYS

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IXYS has announced it's intention to purchase legacy microcontroller manufacturer Zilog. IXYS purchase price for Zilog is reported to be a low $62.4 million. The aquisition is subject to the approval of Zilog's shareholders and other customary conditions. The companies expect the aquisition to be completed during the quarter ending March 31, 2010.

While Zilog initially announced the deal as a merger, IXYS has announced this as an aquisition. IXYS is paying only $3.5858 per share of Zilog stock, for a total deal of $62.4 million. In 2008, IXYS had offered $4.50 a share ($78 Million) but was rejected by Zilog's board, allegedly because IXYS had not offered enough incentive to Zilog's officers

Zilog has a portfolio of some of the most technically impressive 8- and 16-bit microcontrollers available. However, while sales of 8-bit Flash microcontrollers remain strong worldwide, since Zilog's management change in 2007 the company has seen a 70% reduction in workforce and have struggled to maintain declining Zilog 8-bit microcontroller sales. A failed attempt at producing 32-bit ARM microcontrollers resulted in the complete Zilog 32-bit ARM product line being sold off to Maxim Integrated Products earlier this year. Zilog's total sales and marketing employees in the USA number less than 15.

Power semicondutor manufacturer IXYS offers a very strong portfolio of power semiconductors, which are divided into two catagories - Power MOS, and Power Bipolar products. Products include Power FETs, MOSFET modules, IGBTs, IGBT Modules, rectifier diodes, Thyristors, and SSRs. In June 2007, IXYS was ranked by "Business 2.0" magazine as being one of the top 100 fastest-growing semiconductor companies.

As of March 31, 2009, IXYS employed 64 people in sales, marketing, and customer support. IXYS external sales includes 37 Sales Representatives and 11 distributors in the USA. IXYS boasts 125 sales representative organizations and distributors outside the USA. IXYS sales have consistantly been a fair half direct-sales, and half through distribution. IXYS employs approximately 943 employees worldwide.

For IXYS's fiscal year ending March 31, 2009, net revenues were $273.5 Million. Sales have been consistant and the company has been relatively unaffected by the global recession.

If Zilog can get their documentation and quality issues under control, IXYS brings a very strong sales channel to a faltering microcontroller product line.

UPDATE: "Levi & Korsinsky is investigating the Board of Directors of Zilog Inc. For possible breaches of fiduciary duty and other violations of state law in connection with their attempt to sell the Company to Ixys Corporation."
http://finance.yahoo.com/news/Levi-Korsinsky-LLP-bw-3234285079.html?x=0

There are also other investigations on the "potential unfairness of the process by which the ZiLog Board of Directors is addressing the transaction" by Finkelstein Thompson LLP, Law Offices of Brian M. Felgoise, P.C, Law Office of Brodsky & Smith, LLC, and Law Offices of Howard G. Smith.