RF Micro, TriQuint Merger May Not Satisfy Activist Investor
RF Micro Devices Inc. (NASDAQ: RFMD) announced Monday morning that it will merge with TriQuint Semiconductor Inc. (NASDAQ: TQNT) in an all-stock transaction valued at around $1.6 billion. The transaction is set up as a tax-free restructuring, and current shareholders of each company will each hold about 50% of the merged firm. The deal is expected to close in the second half of the year and is subject to a vote of both companies’ shareholders and other routine approvals.
TriQuint was one of the companies we noted last December as being under pressure from activist investors. Starboard Value owns 7.9% of TriQuint’s stock, and the firm said at the time that it would nominate its own slate for TriQuint’s board of directors.
Starboard is not getting much out of the announced merger. RF Micro’s CEO will be the CEO of the combined company and TriQuint’s CEO will be the non-executive chairman. Five current directors from each company’s board will make up the new board, and eight will be independent. Not much change there.
On top of that, the premium being paid to TriQuint shareholders is a modest 5.4% above Friday’s closing price of $9.23. Starboard probably will not be very happy, either with the new governing structure or the price, but whether or not the company chooses to rally other shareholders to its cause remains to be seen. At the time of Starboard’s December letter, TriQuint’s shares were trading at around $8.00.
Investors like the deal, raising RF Micro’s share price more than 16% to a new 52-week high of $6.83 and TriQuint’s share price by nearly 22% to a new 52-week high of $11.38. The higher price on TriQuint’s stock could indicate that investors expect Starboard to go after a better deal. That seems like a reasonable bet.