It is not certain that Zoran Corp. (Nasdaq: ZRAN) shareholders will approve the merger with Britain's CSR plc (LSE: CSR) when they convene next week. Starboard Value LP (a Ramius spin-off) has already announced that it will vote against the merger. CSR is due to acquire Zoran at a value of $484 million in a share-swap deal, after cutting the original price tag of $679 million by 29%.
Yesterday, Starboard sold 300,000 Zoran shares, reducing its stake in company to 8.3% from 9.1%, according to a filing with the US Securities and Exchange Commission (SEC). Despite the sale of shares, Starboard has reiterated its opposition to the merger.
Earlier this year, Starboard forced the ouster of several Zoran directors, including longstanding chairman Uzia Galil.
In June, Nierenberg Investment Management Company Inc. announced that it had reached a 5.1% holding in Zoran and also opposes the merger.
The opponents of the merger have the backing of investor consultancy firm, Glass Lewis & Co., which believes that the sale of Zoran is a mistake. It says that the company, which is traded at low multiples, has enough working capital to "hold on". Zoran says that Glass Lewis's calculations are wrong and that the merger "provides the best value and assurance for shareholders". A different consultancy firm favors the merger.
In a settlement of a class action suit, Zoran disclosed additional financial details about the merger. It says that without the merger, Zoran will report a $30 million loss of $388 million revenue in 2010 - better results than in 2010. The figures imply that Zoran expects a strong fourth quarter. The company also expects average annual growth of 9.7% in 2012-14 and to swing to profit in 2012.
Zoran's share price rose 2% yesterday to $8.07, giving a market cap of $403 million, 4.8% lower than its price when the merger was announced.
Published by Globes [online], Israel business news - www.globes-online.com - on August 25, 2011
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