Altera Corp. shareholder TIG Advisors has started a public campaign to push for a sale of the chipmaker to Intel Corp.
TIG is asking shareholders to vote against a lead independent director at Altera’s annual meeting May 11, citing the board’s failure to engage with Intel on a $54-a-share offer, according to a statement Monday.
Investors are unhappy with the board’s failure to successfully negotiate a deal with Intel and don’t believe the company can achieve a market value equal to the reported offer price on its own, said Drew Figdor, a fund manager at TIG. His firm is trying to get Altera’s biggest long-term institutional holders to register their displeasure via the vote against lead independent director T. Michael Nevens and pressure it to open fresh talks with Intel.
“The company is relying on the apathy of shareholders to not stand up and do something,” said Figdor. “We believe that large institutional shareholders are incensed.”
Intel bid about $54 a share for Altera, people familiar with the matter said this month. Talks between Altera, a maker of programmable semiconductors, and the world’s largest chipmaker ended after Altera turned down Intel’s takeover proposal, the people said.
Last week Altera reported earnings that fell short of analysts’ estimates for a first quarter that “was more challenging than expected,” according to Chief Executive Officer John Daane.
“Daane likes being CEO of a publicly traded company and he’s a good one,” said Jerry Dodson, president and founder of Parnassus Investments in San Francisco. “But John has to realize that we own the company. He’s got to realize that that’s a fair price.”
Dodson said Parnassus, which owns Altera stock equivalent to about 0.5 percent of the company’s outstanding shares as part of the $16 billion it has under management, will vote against Nevens at the shareholder meeting.
Those trying to pressure Altera to reconsider the Intel bid need to mobilize owners of at least 10 percent of the company to force its management to reconsider, he said. If they achieve 30 percent, the board will get a strong message that it will have to do something, he said.
The shares dropped 1.55 percent to $40.26 at the close in New York, giving the company a market value of about $12 billion. The stock made its fourth consecutive daily decline.
There isn’t enough time before the May 11 shareholder meeting to nominate new directors, take control of the board and force a negotiation with Intel, said Figdor. TIG is aiming to use the vote against the director to demonstrate the strength of shareholder feeling in favor of going back to the table with Intel.
“We appreciate the views of our shareholders and remain focused on delivering value to Altera shareholders,” Sue Martenson, a spokeswoman for Altera, said in an e-mailed statement.
Chuck Mulloy of Intel declined to comment.
TIG and Cadian Capital Management were among shareholders that sent letters to the company, urging them to go back to Intel, people with knowledge of the matter said earlier this month. Cadian is Altera’s 11th-largest shareholder, with about 2.8 percent of shares.