NEW YORK (The Deal) -- Integrated Silicon Solution (ISSI) agreed Thursday to yet another sweetened offer from China's Uphill Investment, leaving observers to wonder whether the bidders are both signaling that they could go even further to acquire the chipmaker in what has already been a heated tug of war.
Integrated Silicon Solution said Thursday morning that it has agreed to be acquired by Uphill Investment for $21 per share, just a day after the Milpitas, Calif.-based semiconductor company announced that it had reached a deal to be bought by its bigger peer, Cypress Semiconductor (CY) , for $20.25 per share.
Based on the 31.76 million outstanding shares of the target, the Chinese consortium's latest offer is valued at about $667 million.
The semiconductor company said its board continues to recommend ISSI's shareholders to vote for the agreement with Uphill. The target added that it will have a special meeting to consider approval of the Uphill acquisition on June 19.
Uphill add fuel to a month-long bidding war with its latest offer, which is $1 per share higher than its previous bid of $20 per share. ISSI initially agreed in March to be acquired for $19.25 per share by a consortium of Chinese investors, now called Uphill Investment, in the midst of an activist campaign from Starboard Value. Cypress launched a spoiler bid in mid-May and has been duking it out with Uphill Investment ever since.
"We've got two macho contenders trying to puff up their chest and get the other one to bow out," said Craig-Hallum Capital Group analyst Richard Shannon on Thursday. He had said in an interview Wednesday that the chances of higher bids coming in were greater than 50%.
In fact, Uphill and Cypress may have taken the bidding war for Integrated Silicon to a whole new level, Shannon said Thursday.
"It's interesting that they raised 75 cents," he said, referring to Uphill's counteroffer for Cypress' bid of $20.25.
So far in the bidding war, the two suitors have been sweetening their offers with slight premiums. Cypress launched its spoiler bid of $19.75 per share on May 13. Uphill responded May 29 by raising its offer to $20 per share, to which Cypress responded later that day by increasing its bid to $20.25 per share.
The higher incremental increase in the price from Uphill may be a signal that the group is willing to go significantly higher to clinch the target, Shannon said, adding that the investors likely have backing from the resources of the Chinese government, and that the leadership at the helm of the world's second-largest economy have declared the semiconductor industry a key area.