Infineon Buying International Rectifier; Deal Fuels Trader’s Semiconductor Speculation

Anirvan Ghosh

Germany’s Infineon Technologies AG said it has agreed to buy U.S. International Rectifier Corp in a $3 billion all-cash deal.

Shares of Infineon, already trading up thanks to solid fourth quarter earnings results, spiked 47% in midday trading after news of the deal broke. It was nearing the offer price of $40 a share.

Markets were abuzz after Bloomberg broke news this morning that Infineon, Germany’s largest chipmaker, was nearing a takeover. That prompted speculation about the likely target, and stocks of companies mentioned in the story, such as Fairchild Semiconductor International, Power Integrations and Semtech Corp also rose.

By midday it was clear that International Rectifier was the target, and that a deal had been agreed upon.

Investors are hopeful of another bid. That thinking has opened the door for more semiconductor deal speculation, and shares are still trading at a premium. The chip industry has seen consolidation in recent times as companies deal with rising costs of design and fabrication. This year has been the busiest in last three years. $11 billion worth of deals have been signed in just the first half of this year in the U.S. according to Bloomberg’s deals data.

Infineon CEO Reinhard Ploss has bet on rising demand for chips used in car electronics and battery management in mobile devices. Chips are also increasingly being used to manage optimal power in appliances such as washing machines to industrial motors.

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