Integrated Device shares soar on purported buyout offer, then pare gains

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Source:   —  April 13, 2016, at 5:25 AM

S. chipmaker Integrated Device Technology Incorporated soared more than twenty % on Tuesday after an investor grouping said it'd offered to purchase the company, but the stock lost most of the gains after doubts were raised about the validity of the offer.

n">Shares of U. S. chipmaker Integrated Device Technology Incorporated soared more than twenty % on Tuesday after an investor grouping said it'd offered to purchase the company, but the stock lost most of the gains after doubts were raised about the validity of the offer.

A regulatory filing by a grouping identifying itself as Integrated Device shareholders said it made an proposal to purchase the company for $32 per share in cash. The price represented a sixty-four % premium to Monday'south near and valued the company at $4.3 billion. ()

The filing was the first and only information that Integrated Device has received from this group, the company'south chief executive, Greg Waters, said in a statement, adding that the company hasn't communicated with any of these parties.

Waters said the company is unaware of any other information that'd support a determination that the group’s proposal represents a credible bona fide offer. He said the company will assess further information received to define the credibility of the offer.

Integrated Device'south shares surged 23.5 % to $23.99 before being halted for volatility. Upon the resumption of trading, they gave up most of the gains, to near up 4.1 % at $20.22.

According to the filing made with the Securities and Exchange Commission, the investor grouping is comprised of six Chinese and one Pakistani citizens, and is led by Libin Sun, who owns a 4.4 % stake in the company.

Calls to the phone no mentioned in the investor group'south filing went unanswered.

The SEC couldn't be reached for comment. Industry-funded watchdog the Financial Industry Regulatory Authority declined to comment.

The filing showed that Nauman Aly, who held a 0.1 % stake, had acquired a obstruct of call options for IDTI shares.

Call options give the right to purchase shares at a fixed price at a future date. Their cost typically rises with the price of underlying shares.

At around 11:50 a. m. ET, minutes before the filing appears to have been submitted, a series of call contracts trades were executed at prices roughly equaling the terms of the options transaction in the filing.

IDTI shares began rising at around 12:10 p. m. ET, pushing the options prices up. Eight minutes later, a series of rapid-fire options trades crossed. More than 2.000 contracts traded in the following two minutes, at prices between $2.00 and $3.50.

An amended filing shortly afterward disclosed that Aly had sold all his IDTI calls for a profit of about $427.700, roughly matching the action in those two minutes of trading.

The action raised suspicions among options market experts.

"The alarm for me immediately was that this guy had bought call options expiring in two days," said Christopher Irons, founder of independent investigative research website quoththeravenresearch. com.

(Reporting by Sudarshan Varadhan, Rishika Sadam and Arunima Banerjee in Bengaluru and Saqib Iqbal Ahmed in New York; Editing by Savio D'Souza and Leslie Adler)

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