Will Transmeta Agree To Sell For $15.50? (TMTA, INTC, AMD)

Transmeta Corp. (NASDAQ: TMTA) may be an interesting stock now.  The company scored a major win with a legal settlement/victory last year over Intel (NASDAQ: INTC).  Now Transmeta issued a statement that it has become aware of a letter from Riley Investment Management LLC expressing interest in seeking to acquire all of the outstanding shares of Transmeta not already owned by Riley or its affiliates for $15.50 per share in cash.
This is subject to numerous conditions, which are actually not stated as of yet.  Barron’s had noted a merger was coming yesterday from an SEC filing for $15.50 and shares rose from $12.74 on Wednesday up to $13.46 yesterday.  This morning shares are up over 3% and trading at $13.88 in early morning trading. 

This puts shares at the top of the trading range since its major move last year.  Transmeta’s market cap is currently $167 million.  Riley has many interests and this just a small list of the 35 interests in which Riley Investment Management LLC has a hand in: Cadiz Inc (NASDAQ: CLCI), Management Network Group Inc (NASDAQ: TMNG), Regent Communications Inc (NASDAQ:RGCI), Silicon Storage Technology Inc (NASDAQ:SSTI) and Zilog Inc (NASDAQ: ZILG).  Assuming he has the cash to muster this, it would be a major coup for his investment clients as this could be winning the company for almost free after you back out all the settlement cash and payments.

Riley Investment Management LLC, requested many records in a letter to the board in January that was disclosed in an SEC filing.  This same shareholder is expressing an interest in acquiring the company and he’s been challenging the company for some time.

In a prior SEC filing, Riley noted his request (demand) was "to investigate potential wrongdoing, mismanagement, waste of corporate assets and breaches of fiduciary duties" by members of Transmeta’s board of directors.  Riley has also been on them in 2007 with filing a complain about options grants diluting shareholders.  Riley had also noted that Transmeta failed to adequately disclose the formula behind a hefty bonus payment awarded to General Counsel John Horsley after it scored a $250 million settlement of patent litigation with Intel (NASDAQ: INTC) in October. Riley apparently estimated that Horsley’s bonus payment was at least $11 million.

Interestingly enough, we covered this one back last summer on the note that Advanced Micro Devices (NYSE: AMD) had invested $7.5 million into Transmeta.  Things have been tough on this company for quite some time.   It’s hard to know if the company will agree to sell itself or not.

Jon C. Ogg
February 1, 2008 

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