Rakon takeover offer: Activist shareholder Mike Daniel tells board to act quickly

Rakon minority shareholder Mike Daniel is urging the tech firm’s board to get a wriggle on and consider the $1.70 per share takeover offer - saying he has seen other sale opportunities blown because of director dilly-dallying.

“I urge the directors to do what they need to do as quickly and efficiently as possible. By the sounds of the release it seems there is common ground for both the acquirer and Rakon shareholders to proceed with haste,” Daniel told the Herald this morning.

Earlier, in an email to Rakon chairwoman Lorraine Witten, Daniel wrote: “Lorraine in my lifetime I have seen too many offers withdrawn due to directors’ delays caused by the need to justify their existence”.

Daniel has a small holding but has been able to wield influence - notably with his push for a profit payout. Rakon paid its maiden dividend earlier this year.

He told Witten he was writing on behalf of his interests, plus other shareholders, collectively controlling 11 per cent of shares.

“Be assured without exception and in the absence of a superior bid this block of shareholders would accept the NBIO [non-binding indicative buyout offer] at $1.70 per share,” Daniel wrote.

Inside Rakon’s Mt Wellington plant pic.twitter.com/XHffySmIK2

— Chris Keall (@ChrisKeall) December 18, 2023

But he added it would be a waste of time to engage investment bankers if two major shareholders - the Robinson family and Siward Crystal Technology - were opposed to the deal. He urged Witten to sound them out.

Whether at Daniel’s urging or not, Rakon took that track. An NZX filing said the firm had also received “communications from significant shareholders indicating their support for the board to progress the proposal”.

An independent committee and hired external advisers will review the $1.70 offer from a mystery party that valued the Auckland-based tech firm at $390 million. The bidder was described as a “credible industry player” who was in the same industry but not a competitor.

Shares, which were trading at 62c before the offer was revealed on December 11, closed on Monday at $1.12.

The committee evaluating the offer is chaired by independent director Sinead Horgan. Witten and independent directors, Keith Watson and Keith Oliver, are also members.

Rakon’s shareholders

Various members of Rakon’s founding family, the Robinsons, own 19.7 per cent of its stock.

The next-largest shareholder is Taiwan-based Siward Crystal Technology with a 12.2 per cent stake. Siward, which also makes frequency-control crystals, first invested in Rakon in 2016. The two firms have partnered on various projects.

Daniel’s Wairahi Investments controls a 6.3 per cent stake.

Taxpayers have a small bit of skin in the game via ACC’s 2.2 per cent stake.

Former chief executive Brent Robinson and Siward’s Jung Meng Tseng are both on Rakon’s board.

‘Opportunistic’

Shortly after the $1.70 offer came in, Forsyth Barr called it “opportunistic”.

There were signs that Rakon, which turns quartz crystals into radio frequency control systems that help telecommunications gear, satellites, missile guidance systems and emergency beacons maintain the same “heartbeat” as other electronics, was at the bottom of its cycle as weakness in the telco infrastructure market persisted longer than anticipated.

ForBarr analyst James Lindsay noted that Rakon’s share price was still below the $2.22 it hit in early 2022 - a year that saw the firm report record earnings.

Lindsay said there were several trends, including the booming low-Earth orbit satellite, AI and data centre markets, that could power a “significant rebound” over the next couple of years that would see Rakon return to its 2022 level of profitability.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.