Taiwan’s Yageo To Take Over US Rival Kemet’s Outstanding Shares
On Nov 12, 2019, Yageo Corporation announced its intention to acquire the outstanding shares of KEMET’s common stock for $ 27.20 per share in an all-cash transaction with total equity valued of $ 1.64 billion US dollars.
The purchase price represents a premium of 26% to KEMET’s volume-weighted average price (“VWAP”) for the last 30 trading days and 37% to its VWAP for the last 90 trading days. The transaction is expected to close in the second half of 2020.
With the acquisition of KEMET, Yageo will be well-positioned as a one-stop provider of passive electronic components. Their portfolio would include polymer, tantalum, ceramic, film/electrolytic capacitors, chip resistors, circuit protection, magnetics, sensors, and actuators which serve a full range of end-market segments.
In addition, the combined companies global footprint will better support their partnership with long-standing, blue-chip customers worldwide through a combined footprint of 42manufacturing plants and 14 dedicated R&D centers.
The acquisition benefits:
The combination of Yageo and KEMET will create an industry leader in the $28 to $32 billion passive components industry, with combined annual revenues of approximately US$2.94 billion.Expand Yageo’s product portfolio and enhance Yageo’s ability to serve as a one-stop product solution to customers serving a range of segments and mission-critical applications.The enhanced global footprint will drive operational scale across North America, Europe, and Asia with an increased ability to penetrate attractive, high-growth segments and applications.Drive profitability with meaningful cost synergies and greater efficiencies by leveraging KEMET’s structural transformation for increased and sustainable margins, as well as enhanced durability of KEMET’s revenue base.Enable Yageo to leverage KEMET’s presence and success in Japan through the consolidation synergy of KEMET and TOKIN.Increase Yageo’s presence providing advanced products to the automotive electronics, 5G networking, and communications, robotics and automation and industrial segments, including power supply.Scale KEMET’s business in Greater China and ASEAN region through Yageo’s regional presence and sales channels.
Impacts on customers and distributors:
There are some challenges that have to be resolved in the following months:
The merger, however, has prompted some uncertainty among customers and distributors. If Yageo and Kemet have product lines that overlap, one line will likely be discontinued. This is a problem for customers that have designed that line into their products, especially long-lifecycle equipment.For distributors Yageo and Kemet share in common, those partners likely will stay intact. Distributors that carry only one line may gain the combined product portfolio – or they may be dropped.
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