Transmeta acquisition under scrutiny

ACCORDING TO sources in the investment banking business, the sale of Transmeta to Novafora will be grinding to a halt faster than you can say 'very long instruction word CPU'.

Shareholders, specifically the smaller ones who get little or no say in the deal, are up in arms. The reason is their company is being flogged for $255.6 million, when it holds cash and cash equivalents of around $255.2 million.

In other words: buy the company and loot the bank.

This would mean the company is being bought for around $400k. However, in the quarterly conference call where TMTA discussed the matter to the pundit crowd, the situation was - sort of - explained.

Novafora will pay an additional $11.6 million minus the Piper-Jaffray fee of $2 million and other costs that the company will rack up until Q1 2009 when the deal comes into effect. So to all intents and purposes, Novafora is buying Transmeta for about $5 million - still a sweet deal by any measure.

You might wonder, as many smaller investors surely are, what the company stands to gain from the deal. The word on the street is the smaller investors are up in arms and even some of the heavyweight investors aren’t too happy with this turn of events.

The same sources are also hinting that a couple of other companies are interested in counterbidding – one of which is widely known for its sue-happy attitude towards other companies that inadvertently infringe on their patents.

In the past hours – yes, hours – the law firm of Levi & Korinsky in New York has started a recruitment drive for unhappy investors wishing to start a class-action suit, as you can see here. If this happens, this will go down in history as the fastest class-action ever.

We’d advise any interested parties in taking all this with a bit of caution as there are sure to be developments in the next few hours. µ