On Friday, display press machine Lexar Media (LEXR) received a higher revised takeover bid from Micron Technology (MU). The bid areas the all-stock exchange offer at around $10 a share, up somewhat from the initial bid.
But important investors including billionaire investor Carl Icahn along side portfolio managers and hedge funds have deemed the initial bid to be inappropriate. Elliott Associates feels the initial bet "significantly undervalues Lexar," and seems Lexar is worth between $1.5 billion and $2.4 billion. The estimate is well above the revised takeover bid around $827 million.
I should agree and say the modified takeover bid needs to be denied by shareholders and is much too low. Whilst the market leader SanDisk (SNDK) is dealing at sales micron wants to spend around 1.10x sales for Lexar. Lexar even offers a million patent infringement lawsuit against Toshiba that it'd previously acquired but is now at the mercy of an appeal by Toshiba.
Consider it this way, a successful $400 million settlement and only Lexar would equal around $4.83 per share in additional cash to add to the existing $0.54 in free cash after debt that Lexar has. This means Micron would pay significantly less than $5 a share for Lexars assets, which can be low.
There is also speculation that SanDisk is really contemplating having a run at acquiring Lexar. Sense would be made by this since SanDisk would solidify its leadership position. To check up more, please take a view at: http://www.wsoawards.com/wp-social-curator.
Moreover, SanDisk has when it were able to acquire Lexar a close working relationship with Toshiba, which could see SanDisk decrease or reduce steadily the settlement.
Stay melody. A shareholder meeting to examine the takeover bid has been moved to June 16. In my view, the $10 quote undervalues Lexar. Question is may a white knight area?.
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