Integrated Device Technology Gyrates on Takeover Bid Filing

  • Company says it doesn't know whether the offer is credible
  • Analysts say bid is suspicious, someone out for own gain

Integrated Device Technology Inc., a maker of electronic parts used in cars and communications networking, rose and fell rapidly as questions arose about the legitimacy of a takeover proposal included in a regulatory filing.

The shares surged as much as 23 percent after a group claiming a stake in Integrated Device said it had made an offer to buy the company. The stock gave back most of the advance within a half hour.

“At this time we are unaware of any other information that would support a determination that the group’s proposal represents a credible bona fide offer to purchase the company,” Integrated Device Chief Executive Officer Greg Waters said in a statement. “These SEC filings represent the first and only information IDT has received from this group, and we have not had any communication whatsoever with any of these parties.”

Six individuals who listed their addresses as in China said they purchased more than 6 million shares of San Jose, California-based Integrated Device, including those subject to call options, according to the filing. The filing included a letter dated Tuesday to the company’s board offering to buy all outstanding shares not already owned for $32 each. Integrated Device said it will examine any further information it receives from the group to decide whether the offer is genuine or credible. A call outside business hours to the address of the Chinese group wasn’t answered.

“We’ve seen a lot of different offers being put out there, but nothing as odd and suspicious as this,” said Betsy Van Hees, an analyst at Wedbush Securities. “I think it’s someone doing it for their own gain.”

The initial filing was amended in a follow up. That amendment, which didn’t include the letter or merger proposal, detailed how one of the filing party had sold options on 185,000 shares for $447,740. The U.S. address listed for the seller of the options, Nauman A. Aly, in Portland, Oregon, appears to be a warehouse when viewed by Google Maps street view function.

Street view of Portland address.

Source: Google

Regardless of the veracity of the filings, a few things are certain. Volume in a lightly traded series of bullish Integrated Device calls surged in the hours before the group’s statements were released. In calls that pay off if the stock is above $20 this month, almost 2,000 lots changed hands between 9:30 a.m. and noon New York time, compared with a full-day average of fewer than 30 in previous days.

The second filing says Aly bought roughly that amount of those options Tuesday and then sold them at prices ranging from $2 to $3.70. Data compiled by Bloomberg shows April calls did briefly trade in that range after news of the filing hit -- for about 15 minutes starting at 12:15 p.m. in New York. That’s well above their price earlier, when they traded for 10 or 15 cents apiece.

“It sounds like either something’s fishy, or someone screwed up -- probably a combination of both,” said Mark Sebastian, options trader and founder of Option Pit, a Chicago-based education and consulting firm.

Integrated Device gained 4.1 percent to $20.22 at the close in New York trading, giving the company a market value of more than $2.7 billion.

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