Zilog fires back at Harvey Partners over letter, sale of company

By Lisa Kerner

Charlotte, N.C., April 17 - Zilog, Inc. chief executive officer Darin Billerbeck denied the company's receipt of a March 14 letter from Harvey Partners, LLC urging Zilog to sell.

Billerbeck made his statement in a letter to Harvey Partners that was included in a form 8-K filed with the Securities and Exchange Commission.

Zilog's board of directors became aware of Harvey Partners' letter, signed by James A. Schwartz, as part of an April 10 news release issued by the 4.98% shareholder, Billerbeck said.

Harvey Partners, in its April 10 news release, accused Zilog's board of ignoring the shareholder's concerns regarding the direction of the company and Harvey Partners' belief that Zilog's board should pursue a sale of the company.

Zilog management has not been able to leverage the company's technology on its own, Harvey Partners claims.

Billerbeck noted that Zilog values the input of all of its stockholders and has "duly noted and considered" points made by Schwartz in his letter.

Harvey Partners denied being an activist in its release.

"We agree with management that the universal remote, embedded flash and 32-bit ARM businesses are indeed exciting," Schwartz wrote. "However, the balance of the company's business is lackluster at best, a wasteful management distraction, and a financial drain."

In February, Zilog defended its decision to reject a $4.50-per-share offer from Universal Electronics Inc. to another shareholder, Riley Investment Management, LLC.

Zilog said in a letter to Riley that it was unclear whether Riley's comments were made from its perspective as a Zilog stockholder, as a potential acquirer of Zilog in partnership with Universal Electronics or as Universal Electronics' investment banker.

Zilog pointed out that prior to the announcement of the proposal, B. Riley & Co.'s analyst had a price target for the company's common stock of $6.00 per share, while another analyst covering Zilog had a price target of $8.00 per share.

Based in San Jose, Calif., Zilog is a supplier of eight-, 16- and 32-bit microcontroller and microprocessor system-on-a-chip products.

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