ON Semiconductor (ON) Could Raise Offer for Fairchild Semiconductor (FCS) to $22 - FBR Capital
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Following news after the close that Fairchild Semiconductor (NASDAQ: FCS) received a revised $21.70/share bid from its Chinese suitor "Party G Group," FBR analyst Christopher Rolland thinks ON Semiconductor (NASDAQ: ON) may raise its offer to $22 per share, but could the analyst said even as high as $24 could be rationalized.
Rolland commented: "While the Chinese suitor’s original $21.70 cash offer remains unchanged, new terms have sweetened the deal. First, “Party G Group” offers to reimburse Fairchild for the approximate $70 million termination fee with ON Semi. Secondly, Chinese “Party G Group” would absorb the regulatory risk, shouldering a reverse termination fee to Fairchild of $108 million if the deal were to fail CFIUS (and $215 million under same terms as the ON termination agreement). While many details may yet to be revealed, on the surface, we believe the elimination of the ON Semi termination fee and the transfer of potential regulatory liability limits downside and makes the $21.70 offer superior. With another step in the right direction, we are once again reiterating our Outperform rating on FCS, as we believe there is a meaningful probability that ON Semiconductor will raise its bid to $22 and perhaps higher. (We can rationalize $24.)"
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