By Lehar Maan
Sept 27 RDA Microelectronics Inc said China's state-owned Shanghai Pudong Science and Technology Investment Co Ltd offered to buy the shares of the chipmaker it does not already own at $15.50 per American depositary share.
The offer represents a premium of 11.7 percent to RDA Microelectronics' Thursday close of $13.88 and values the company at about $750 million.
The stock was up 9 percent at $15.12 but below the offer price, indicating that investors don't expect the deal to go through. The stock rose to a high of $15.25 on the Nasdaq at open.
"The bid is probably too low..." Chardan Capital Markets analyst Jay Srivatsa told Reuters, adding that an increase of $1.50 or maybe even $2.0 per ADS could be expected to the current offer. "I would expect the RDA board to potentially renegotiate that (bid price)..."
Private equity firm Warburg Pincus LLC was RDA Microelectronics' biggest shareholder with a 35.43 percent stake as on June 30, according to Thomson Reuters data.
RDA Microelectronics said its board was reviewing the proposal.
Shanghai Pudong Science, owned by the Pudong New Area government of Shanghai, said it intended to finance the deal through equity and debt.
RDA Microelectronics, which makes radio-frequency chips for mobile and broadcast devices, counts Huawei Technologies, ZTE Corp and Lenovo Group Ltd as customers.
The offer seems to reflect the Chinese government's push to keep its intellectual property at home, Srivatsa said.
In July, a unit of China's state-owned Tsinghua Holdings Co Ltd had said it would acquire Chinese cellphone chip designer Spreadtrum Communications Inc for a raised offer price of about $1.78 billion.
China plans to invest 2 trillion yuan ($323 billion) to improve its broadband infrastructure by 2020 with an aim of taking nearly its entire population online, a vice minister said earlier this month.
The government is trying to improve fixed-line and wireless connectivity throughout China, home to the largest number of mobile phone users in the world but where only 45 percent of the population has Internet access.