An investigation on behalf of current investors ZiLOG, Inc. (Public, NASDAQ:ZILG), who purchased ZILG shares before December 07, 2009, over potential breaches of fiduciary duty and other violations of state law in connection with an alleged unfair takeover price was announced.

The investigation by a law firm focus on potential breaches of fiduciary duty and other violations of state law by the Board of Directors of ZiLOG, Inc. arising out of their attempt to sell ZiLOG, Inc. (Public, NASDAQ:ZILG) to IXYS Corporation (NASDAQ: IXYS). On December 07, 2009 IXYS Corporation (NASDAQ: IXYS) announced that it has entered into a definitive agreement to acquire Zilog, Inc. (NASDAQ: ZILG). Under the terms of the agreement, IXYS Corp will acquire all of Zilog Inc’s outstanding common shares for $3.5858 per share in cash, or approximately $62.4 million.

But according to an investigation by a law firm “the transaction appears to be unfair” to current investors of ZiLOG, Inc. (Public, NASDAQ:ZILG) because the “offer to purchase ZiLOG, Inc. (ZILG) appears opportunistically timed to take advantage of the current economic downturn” and is “grossly unfair, inadequate, and substantially below the fair or inherent value of ZILG”.

Shares of ZiLog, Inc traded at $3.50 per share after the announcement and at $3 per share before the news. ZILG shares traded over $4 per share in 2008, and at almost $6 per share in 2007.

The investigation calls the deal even “suspicious because it appears from a review of the Company's financial statements that the inherent value of the Company's stock is greater than $3.59, because at least one analyst has set a target price of $6.00 for the Company's stock, because the Board of Directors agreed not to shop the Company to see if it could obtain a better price for the shareholders than the $3.59 offered and also because the Board of Directors agreed to a provision in the deal which dissuades other potential suitors from bidding on the Company.”

ZiLOG, Inc., located in San Jose, California, is a fabless semiconductor supplier of microprocessor and microcontroller semiconductor products. A microcontroller includes a central processing unit, non-volatile program memory, random access memory for data storage and various peripheral capabilities. The microcontroller is offered as a complete solution because it incorporates application-specific software provided by the customer and may include specialized peripheral device controllers and internal or external non-volatile memory components to enable the storage and access of additional program software. ZiLOG, Inc. reported on March 31, 2008, for the previous 12 months Total Revenue of $44.64million and on March 31, 2009, for the past 12 months Total Revenue of $36.16million.