Silicon Storage Technology, Inc. Hit by Shareholder Lawsuit

If you are currently an investor in shares of Silicon Storage Technology, Inc. (NASDAQ:SSTI), and purchased the shares before November 13, 2009, and / or have additional information relating to the investigation, you should contact the Shareholders Foundation, Inc.

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Company Name(s): 
Silicon Storage Technology
Case Name: 
Silicon Storage Technology Acquisition 1117/2009
Case Status: 
Lawsuit Filed
Affected Securities
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 
Class Period End: 
Court of Filing: 
Superior Court of the State of California

An investor in Silicon Storage Technology has filed a lawsuit against Silicon Storage, the Company's Board of Directors, Prophet Equity LLC, and Technology Resource Holdings, Inc., a wholly owned subsidiary of Prophet in the Superior Court of the State of California on behalf of current investors Silicon Storage Technology, Inc. (Public, NASDAQ:SSTI), who purchased the shares before November 13, 2009, over alleged breaches of fiduciary duty in connection with an alleged unfair takeover price.

According to the complaint, filed on November 16, 2009, the plaintiff alleges breaches of fiduciary duty, unjust enrichment and violations of state laws relating to the proposed going-private deal. On November 13, 2009, Silicon Storage Technology, Inc. (NASDAQ: SSTI), announced that it has entered into a definitive merger agreement to be acquired by Technology Resource Holdings, Inc., a Prophet Equity LP-controlled entity, as well as by members of Silicon Storage Technology's management team. Prophet Equity LP will acquire all of the outstanding common stock of the company for $2.10 per share, except for shares held by Bing Yeh, Silicon Storage Technology's Chairman and Chief Executive Officer, and Yaw Wen Hu, Silicon Storage Technology 's Executive Vice President and Chief Operating Officer and member of the Board of Directors, who have agreed to exchange all of their shares of SST common stock for shares of capital stock of the resulting privately held company.

According to Silicon Storage Technology the board of directors approved the agreement and the offer represents approximately a 13 percent premium to the closing price per share of SST's stock on November 12, 2009

But shares of Silicon Storage Technology (SSTI) traded at $2.30 per share after the announcement, thus above the present offer. SSTI shares were down from its 52weekHigh of $3.08 per share, $3.46 per share in August 2008, $5.79 per share in 2007, and almost $15 per share in 2004 and according to the complaint, the members of the Company's Board breached their fiduciary duties by approving the management-led acquisition of Silicon Storage by private equity buyers TRH and Prophet for inadequate consideration and under circumstances unfair to public Silicon Storage shareholders. Among other allegations, the complaint alleges that the Company's Board suffers from significant conflicts of interests because the Merger Agreement provides for the continuation of SST's current management (including Messrs. Yeh and Hu) and directorship with the surviving entity and that unlike public shareholders certain members of management will continue to own a stake in SST's growing business. Silicon Storage Technology, Inc., located in Sunnyvale, California, is a supplier of NOR flash memory semiconductor devices for the digital consumer, networking, wireless communications and Internet computing markets. Silicon Storage Technology also produces and sells other semiconductor products, including NAND flash controllers and NAND Controller-based modules; smart card integrated circuits (ICs), and modules; flash microcontrollers; and radio frequency ICs and modules.Silicon Storage Technology reported in 2007 Total Revenue of $411.75million and in 2008 Total Revenue of $315.54million.