Bake sale: CEVA’s unsolicited offer to buy MIPS

In a move to catch up with industry coverage of CEVA’s unsolicited offer to buy MIPS Technologies, I turned to Yahoo Financials to find out what was going on. What I quickly discovered in looking at Yahoo was that the CEVA/MIPS story has gotten ugly.

I’m among many who have been interested in MIPS over the years for several reasons: a) MIPS used to be on the EDAC Board of Directors in the person of then-MIPS President & CEO John Bourgoin, and b) MIPS was founded by Stanford President John Hennessy.

Now, however, per the Press Release posted on November 28th: “Levi & Korsinsky is investigating the Board of Directors of MIPS Technologies, Inc. for possible breaches of fiduciary duty and other violations of state law in connection with the sale of the Company to Imagination Technologies Group PLC and the sale of the Company’s patents to Allied Security Trust (“AST”).

“Under the terms of the agreements, AST will acquire 498 of MIPS’ total 580 patent assets for $350 million and MIPS will be granted a royalty-free, perpetual license to the patents sold to AST. MIPS will also provide a restricted license to AST for the 82 retained patents. Subject to consummation of the AST transaction, Imagination will acquire the operating business of MIPS, the remaining 82 patents, and license rights to the remaining patent properties of MIPS for $60 million. The net proceeds of the two sales represent a price of approximately $7.31 per share.

“Since agreeing to this merger, MIPS has received an unsolicited merger proposal from CEVA, Inc. offering to purchase the Company for $75 million. The investigation concerns whether the MIPS Board of Directors breached their fiduciary duties to stockholders by failing to adequately shop the Company before entering into agreements with Imagination Technologies Group PLC. In particular, MIPS stock has traded as high as $7.64 per share as recently as September 17, 2012.”

So what does the lawsuit mean? At face value, it looks like if you’ve agreed to sell your home-baked pumpkin pie to somebody for $7 and your extra pumpkins to a second customer for $45, and then the pie is baked and ready to deliver but a third customer suddenly says they’ll pay $9 for the pie, you’re supposed to cease the $7 sale and follow through on the $9 offer.

More to the point, even before you engaged in the $7 agreement, you were supposed to shop your pie all over town. You were supposed to orchestrate a bake sale to be sure every possible offer for your pie is known to you – and to the folks who had invested in your pumpkin patch – prior to entering into any agreement to sell pie or pumpkins.

There are several questions, however, that might be asked: When have you shopped your pie around enough? When can you be sure enough potential buyers have attended your bake sale? And when can you bring your bake sale to a close because the certifiably highest bidder has finally showed up to maximize your winnings?

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December 2nd update …

Since posting this blog on November 29th, the following Press Release posted on December 2nd announced yet another legal investigation:

“Lifshitz Law Firm announces an investigation into possible breaches of fiduciary duty in connection with the proposed sale of MIPS Technologies, Inc. to Imagination Technologies Group plc following the consummation of the proposed patent sale transaction with Bridge Crossing, LLC and the proposed recapitalization, for $60 million in cash.  On November 20, MIPS announced that it has received an unsolicited proposal from CEVA, Inc. to acquire all of the outstanding MIPS shares, following the consummation of the proposed patent sale transaction and the proposed recapitalization for $75 million in cash.”

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Tags: Allied Security Trust, AST, CEVA, EDAC, Imagination Technologies Grouop, John Bourgoin, John Hennessy, Levi & Korsinsky, Lifshitz Law Firm, MIPS

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