Micrel voices commitment to creating shareholder value, adopts rights plan

By Lisa Kerner

Charlotte, N.C., March 25 - Micrel, Inc. reaffirmed its commitment to enhancing shareholder value in response to Obrem Capital Management, LLC's suggestion that Micrel explore strategic alternatives, including a sale of the company.

Obrem, with a 14.9% stake in Micrel, made its recommendation in a March 12 letter to the company's board, it was reported in a schedule 13D filing with the Securities and Exchange Commission.

While Micrel's board acknowledges that "industry challenges and market volatility" have resulted in declining stock prices, it believes the company's solid foundation, financial and operational improvement initiatives and capital structure will "drive returns and maximize long-term shareholder value."

Micrel's board, along with its advisers, has been reviewing the capital structure, financial and strategic issues faced by the company; however, there is no assurance that any action will be taken as a result, a company news release stated.

According to the release, Micrel has repurchased over 10% of its outstanding common shares since the beginning of 2007 and began a quarterly dividend payment in April 2007.

Micrel's board said it has adopted a limited-duration shareholder rights plan in connection with its review. The rights plan is designed to protect Micrel's shareholders in the event of an unsolicited takeover of the company and other abusive or coercive tactics to gain control of the company.

Under the rights plan, in effect until March 24, one preferred stock purchase right will be distributed as a dividend on each common share held of record as of the close of business on April 15. Each right, if and when it becomes exercisable, entitles the holder to buy one one-thousandth of a share of a new series of participating preferred stock for $36, the release said.

"Micrel's strategy of targeting diversified, growing end markets with a broad portfolio of high performance products has produced a resilient business model that generates consistent profitability and strong cash flows," Micrel chairman, president and chief executive officer Ray Zinn said in the release.

Zinn owns 11.2 million shares, or 15.6%, of Micrel's outstanding common stock.

Company founder and 14.1% shareholder Warren Muller said he has "full confidence" in the ability of Micrel's board and management team to "execute its strategy to drive profitable growth, and consequently, increase shareholder value."

Micrel develops and manufactures high-performance analog power integrated circuits (ICs), mixed-signal ICs and digital ICs. The company is based in San Jose, Calif.

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