Zarlink rejects hedge-fund demands
Zarlink Semiconductor has dismissed the call from a hedge fund to replace five of its directors. The chipmaker received a letter from Scott Leckie of National Bank Financial, who claimed to manages or control 5.2 per cent of Zarlink’s stock.
The letter threatens a proxy fight to attain board control if Zarlink does not comply.
“This is a hedge fund that owns just 5 per cent of the company seeking an opportunity to generate a short-term gain, without any regard for the longer-term opportunities for the majority of our shareholders,” said Kirk Mandy, president and CEO of Zarlink. “We believe Mr Leckie is intentionally misstating the financial position of Zarlink, our product strategy and market realities to further the hedge fund’s agenda and destroy one of the few remaining Canadian-based high-tech companies.”
Zarlink said in a statement to investors: “In his letter, Mr Leckie is prepared to declare the Legerity acquisition a failure after only 11 months. In fact, sales from the Legerity portion of our business are helping fuel revenue growth. Zarlink revenue grew by 13 per cent from the third quarter of fiscal 2008 to the fourth quarter of fiscal 2008, and is expected to grow by another 9 to 11 per cent in the first quarter of fiscal 2009.”
The statement continued: “Mr Leckie also mistakenly stated that the Company has continued to miss sales guidance. This is simply not true. Zarlink has met or exceeded guidance in 11 of the past 12 quarters.”
Henry Simon, Zarlink chairman claimed: “This is an attack against the leadership of Zarlink that only serves to provide National Bank Financial with a short-term gain at the expense of other shareholders who recognise the longer-term growth and value opportunity. We are confident that our product investment and strategic focus will drive profitable growth in Fiscal 2009 and future years.”