SEVEN weeks after a California firm failed to withdraw its takeover offer for
mainboard-listed MFS Technology, it is applying legal pressure on its Singapore
parent company to vote against the deal.
Multi-Fineline Electronix (M-Flex) announced yesterday that it had filed a
lawsuit in the Delaware Chancery Court seeking to direct WBL Corporation to
vote against the proposed takeover.
The Nasdaq-listed firm reiterated its reason for wanting to back off the
deal: that given the 'significant decreases' in MFS's net sales and net incomes
since March, the takeover would have been 'contrary to the best interests of
M-Flex and its unaffiliated stockholders'.
So even though WBL had already given an undertaking to support the takeover,
by pressing on with the deal, the mini-conglomerate would be 'breaching its
fiduciary duties and obligations to M-Flex's minority stockholders', says
M-Flex.
Yesterday, both MFS and WBL issued their responses to M-Flex's announcement.
MFS urged its shareholders to refer to the latest update of its performance -
its unaudited full-year results announced last Friday. In particular, its
fourth-quarter performance for this year had 'improved significantly' compared
to Q3, it said.
WBL said it was consulting its advisers on the implications of this
development and would release an announcement 'in due course'.
The suit is the latest twist in the troubled saga between M-Flex and its
sister company MFS, both of which are subsidiaries of WBL.
First announced in March, the takeover would have created the world's
second-largest maker of flexible printed circuit boards (PCBs) in revenue
terms. But M-Flex had a change of heart after MFS reported in August that its
net profit for the three months ended June 30 plunged 84 per cent to $1.04
million. Revenues had fallen 8 per cent to $71.9 million.
M-Flex applied later that month to the Securities Industry Council (SIC) but
was denied permission to withdraw its bid to acquire the outstanding shares of
MFS for as much as $1.20 apiece. Under Singapore law, M-Flex cannot call off
its offer without SIC's approval.
Now, it has resorted to legal action.
