The global credit crunch has been the bane of businesses and banks, but it helped International Rectifier Corp. dodge a hostile takeover bid.

Vishay Intertechnology Inc. said last week that it was abandoning its $1.7 billion tender offer for the El Segundo maker of power management chips, whose products appear in everything from washing machines to laptop computers.

The announcement came four days after the annual meeting of International Rectifier shareholders, who rejected a Vishay-backed slate of nominees for the board.

Vishay acknowledged defeat in its two-month back-and-forth battle with its rival semiconductor manufacturer. International Rectifier successfully fended off two unsolicited bids by Vishay, which said International Rectifier executives were protecting their own interests to the detriment of shareholders.

In arguing against Vishay's $23-a-share bid, International Rectifier executives repeated their contention that it dramatically undervalued a company they said is on the verge of a turnaround.

But analysts said Malvern, Pa.-based Vishay's inability to secure financing in the current credit market was likely the decisive factor.

"The fact that Vishay didn't have a firm financing commitment offer from some bank guaranteeing the money ultimately is why this fell apart," said Craig Berger, equity research analyst at Friedman Billings Ramsey Group Inc.

"If Vishay had gone public with a letter of credit, then more shareholders would have been willing to back it," Berger said. Without such a letter, shareholders saw the offer as "garbage."

International Rectifier executives drew on doubts about financing to imply that Vishay may not have been making a serious bid for the company.

In a Sept. 29 letter to shareholders under the heading "Vishay's $23 offer is it real?" management wrote that if Vishay did get funding, shareholders "should read the fine print. How certain will that financing be?"

A spokesperson for Vishay declined to comment.

In a statement last week, Vishay said that the company "cannot pursue our proposal in the face of opposition from a board that has refused to engage in any discussion with us regarding our offer."

Vishay isn't the only company that has seen a takeover attempt torpedoed by the contracting credit market. Last week, Waste Management Inc., the nation's largest trash collection company, dropped a $6.7 billion unsolicited bid for Republic Services Inc. because financing the transaction had become too expensive.

Failed bids like Vishay's illustrate the chilling effect a down economy can have on acquisition deals, analysts said.


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