Wednesday, March 22, 2006
Elliott Associates L.P. and its sister fund, Elliott International L.P., has acquired a 6.5 percent stake in Lexar Media Inc. The hedge fund separately said that it opposes Micron Technology Inc.’s acquisition of Lexar.
As reported, billionaire financier Carl Icahn and other investors are also attempting to break up Micron’s proposed $680 million deal to acquire Lexar.
In a letter to the board of Lexar, Elliott Associates (New York) blasted the deal, claiming that the Micron-Lexar acquisition is worth $1.5-to-$2.4 billion.
“Elliott is extremely displeased by the current Micron transaction, in which Lexar shareholders are to receive 0.5625 Micron Technology shares per each company share, as we strongly believe this transaction significantly undervalues Lexar,” according to the letter.
“In our view, the consideration under the Micron Transaction falls meaningfully short of Lexar's standalone value and the valuation discrepancy is even more egregious relative to Lexar's value contribution to its acquirer,” according to the letter.
“While we firmly disagree with the level of consideration offered to Lexar shareholders in the Micron Transaction, we fully agree with the premise of selling the company,” it stated. “As presented in our analysis, Lexar is worth significantly more to an acquirer than it is on its own and a sale of the company can unlock meaningfully greater shareholder value than continuing as a standalone entity.”
By: DocMemory
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