US firm Sigma Designs, a leading provider of connected media platforms, has indicated that it is mailing a letter to its shareholders which urges them to reject a bid by minority shareholder Potomac Investment Partners to nominate three new directors to the company’s board.
The tussle between Sigma’s board and Potomac appears to be growing increasingly bitter: despite owning just 7.9% of Sigma’s stock, Potomac sent a letter to all of Sigma’s shareholders last month which proposed the nomination of three Potomac directors to the Sigma board during its next AGM in order to “end the erosion of shareholder value”.
This in turn led to Sigma publicly challenging the ability of Potomac’s nominees to control Sigma’s board of directors, singling out one of them with particular ire as having never served on the board of directors of a public company.
Despite Potomac’s allegations that Sigma is misspending precious cash resources on R&D efforts and strategic acquisitions, the company’s board asserts that it is in the middle of implementing a strategic plan to transform the company into the leading provider of semiconductor solutions for intelligent media platforms.
Sigma Designs has seen its share price tumble by over 80% since the beginning of the global economic crisis in 2007 – a fact pounced on by Potomac, along with the company’s annual loss of over US$ 168mn for the fiscal year ended January 28th, and steadily declining revenues during the past five fiscal quarters.
The chip maker does however offer an olive branch to Potomac with the suggestion of forming a new board of five directors, of which two would be Potomac nominees. Sigma Designs’ next annual meeting of shareholders will be held on August 7th.