Kemet to Vishay: no way

Electronic News, July 8, 1996 by Bernard Levine

Greenville, S.C.--Capacitor maker Kemet Electronics spurned Vishay Intertechnology's take-over initiative (EN, July 1), telling its suitor early last week it was "not interested in engaging in discussions." Kemet's board also implemented poison pill provisions that would make any hostile Vishay tender offer for Kemet difficult.

Vishay had not responded by the start of the long holiday weekend, with its chairman, Felix Zandman, apparently still weighing whether to proceed on an unfriendly basis or throw in the towel. Dr. Zandman had earlier proposed "friendly discussions regarding a merger of the two companies" in a letter to Kemet chairman David Maguire. Neither Dr. Zandman nor Mr. Maguire has returned phone calls seeking comment since the take-over saga between the passive component powerhouses began.

Other Vishay officials have also been unavailable, but Glenn Spears, Kemet senior VP and secretary of the board, was reached on Wednesday. "At this time, the statement we released on Monday sums up our position very clearly and precisely. Kemet is not interested in engaging in discussions." He wouldn't comment when asked if there had been any other communications between the two companies, or their leaders. "We want to be sure the message is very clear to Vishay that we don't want any talks," Mr. Spears added.

The drama began on June 26, when Vishay publicly released Dr. Zandman's letter to Mr. Maguire. It is not known if there had been any previous discussions. The following weekend, Kemet's board met and Mr. Maguire then sent a personal letter to Dr. Zandman, rejecting the overture.

In a statement released last Monday after Mr. Maguire's letter went out, Kemet said it had advised Vishay "it was not interested in engaging in discussions." The Kemet board "determined that the company's strong future prospects as an independent company make discussions with Vishay not in the best interests of the company, its stockholders, employees, customers and other stakeholders." Kemet also said its board adopted a preferred share purchase rights plan and declared a dividend distribution that would go into effect under certain conditions if a tender offer were made for Kemet stock.

Vishay had not put a price tag on its proposal, but some analysts and others believe a potential deal could be worth in the billion-dollar range, although some noted possible antitrust concerns. Both firms compete in tantalum and other capacitors; Vishay, on an acquisition drive in recent years, has a broader line, including resistors and other passives.

Some industry observers expressed surprise that Vishay had made its offer to Kemet in such a public manner, apparently without any advance notice to Kemet top management before the published letter from Dr. Zandman to Mr. Maguire, saying they were not surprised at Kemet's negative response. A few voiced doubt that Vishay could gather the financial resources to pursue a successful hostile offer for Kemet if the target company maintains its resistance, although others thought it might be possible. Dr. Zandman's letter to Mr. Maguire had indicated that financing the friendly proposal would be no problem.

Additional reporting by Fred Guinther.