Transmeta says rejects $15.50/shr buyout offer

SAN FRANCISCO, Feb 28 (Reuters) - Transmeta Corp TMTA.O has rejected an offer by key shareholder Riley Investment Management to buy the microchip designer for $15.50 per share, saying it undervalued its assets and prospects.

Transmeta, which said on Feb. 1 it had received a letter of interest from Riley, announced its decision to reject the offer in a filing made on Thursday with the U.S. Securities and Exchange Commission. (Reporting by Scott Hillis)