M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Friday, November 4, 2011

Skyworks fireworks

Well for a private arbitration process, it sure is getting a lot of attention, mostly because the parties themselves can't keep quiet.  It started yesterday when Skyworks filed a withdrawal request with the SEC to pull its S-4 filing.  According to the letter to the SEC:

The Registrant is currently engaged in an arbitration in the Court of Chancery of the State of Delaware against the other party to the proposed merger, Advanced Analogic Technologies Incorporated (“AATI”). In this arbitration, the Registrant is seeking to be released from its obligations to proceed with the transactions contemplated by the Registration Statement, while AATI is seeking to compel Skyworks to consummate the transactions contemplated by the Merger Agreement. ... Among other things, information has come to the attention of the Registrant that raise questions under Generally Accepted Accounting Principles (“GAAP”) as to AATI’s recording of certain revenue that AATI reported for the quarter ended June 30, 2011 — revenue that is included in financial statements that are set forth in (or incorporated by reference into) the Registration Statement and in pro forma combined financial statements of AATI and the Registrant included in the Registration Statement. Pending a final determination of the issues raised in the ongoing arbitration proceedings (including determination of the proper accounting treatment of the revenue referred to above), the Registrant believes that investors should not rely on the Registration Statement in these circumstances, and that the withdrawal of the Registration Statement in its entirety is therefore consistent with the public interest and the protection of investors.

OK, there you go. Notwithstanding earlier announcements by the parties, it's not a MAC that's at issue.  Skyworks is more likely arguing that an AATI representation was not true at signing.  But it doesn't stop there.  AATI fired back in a press release

AnalogicTech believes the actions taken by Skyworks today are calculated acts of desperation to advance the interests of Skyworks at the expense of AnalogicTech and its stockholders.  

Skyworks' allegations are false, baseless and entirely without merit.  AnalogicTech stands behind its financial statements and accounting practices and will continue to defend itself vigorously against Skyworks' spurious claims.  

Just a few months ago, Skyworks conducted extensive due diligence on AnalogicTech and entered into a legally binding definitive merger agreement to acquire the Company.  We believe that Skyworks' public disclosure of false allegations are in clear violation of the Delaware Chancery Court's rules of arbitration and are just another desperate attempt by Skyworks to renege on its obligations under its merger agreement with AnalogicTech.  

He said, she said.  The problem with trying to follow a dispute like this from the outside is that nothing is public unless the parties want it to be.  So, we end up getting bits and drabs of information here and there.  It becomes very difficult for an observer, or the market, to get any idea what the issues are.  Welcome to the world of private arbitration.  

-bjmq

 

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