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LONDON, UK / ACCESSWIRE / December 22, 2016 / Active Wall St. blog coverage looks at the headline from InvenSense, Inc. (NYSE: INVN). Japanese Electronics Components manufacturer TDK Corp. announced on December 21, 2016, the acquisition of US Chip manufacturer InvenSense. The all-cash transaction is valued at $1.3 billion. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.
One of InvenSense's competitors within the Semiconductor - Integrated Circuits space, Semtech Corp. (NASDAQ: SMTC), reported on November 30, 2016, its unaudited financial results for its third quarter of fiscal year 2017, which ended October 30, 2016. AWS will be initiating a research report on Semtech in the coming days.
San Jose, California-based InvenSense is a leading provider MEMS (micro electrical mechanical systems) sensor platforms for both industrial markets and consumer electronics. Its solutions combine MEMS sensors, such as accelerometers, gyroscopes, compasses, and microphones with proprietary algorithms and firmware that intelligently process, synthesize, and calibrate the output of sensors, maximizing performance and accuracy. It is known as a major supplier of motion sensors and gyroscopes for Apple Inc. and Samsung Electronics Co.
Tokyo, Japan based TDK is a leading electronics company that manufactures electronic materials, electronic components, and recording and data-storage media. The Company has a network of design and manufacturing locations and sales offices in Asia, Europe, and in North and South America.
Commenting on the acquisition, Shigenao Ishiguro, President and CEO of TDK said:
"This acquisition is a fundamental element in TDK's strategy to provide unique and high-value-added products and services in IoT. We aim to become a strong player in the sensor business with InvenSense as our perfect partner."
Behrooz Abdi, President and CEO of InvenSense added:
"Together with TDK, we see a bright future that leverages our commitment to innovation with TDK's scale, significant partner relationships and distribution channel. Our strategic goals are aligned, and we are confident that together with TDK we will accelerate our roadmap to provide next-generation sensor technologies in key fields for the world's most innovative companies."
Details of the agreement
TDK will acquire all the outstanding shares of InvenSense at $13 per share in cash, valuing the transaction at $1.3 billion. The offer price is at a 19.9% premium to InvenSense's closing share price on December 20, 2016, a day before the announcement was made. The Board of Directors of both companies have already agreed to the deal and it is expected to be finalized by the second quarter of the fiscal year ending March 31, 2018. The deal is subject to both companies' shareholders' approvals and fulfilment of statutory closing conditions. TDK plans to finance the deal using its cash reserves.
InvenSense will be merged with and into a newly formed subsidiary of TDK. Following the merger, InvenSense will continue to be a wholly-owned subsidiary of TDK.
Timeline to the Sale
In late October 2016, InvenSense hired a financial consultant to look at strategic alternatives to enhance shareholders' value. The exact time frame or step-by-step plans to this effect were not disclosed by the Company at that time.
What TDK gains from this deal?
TDK's plans are to establish itself as a leading global player in the sensor business. TDK's strategic growth plans for the future will concentrate on three major areas - Internet of Things (IoT), Automotive, and Information and Communications Technology (ICT). With this deal, TDK is aiming to leverage InvenSense advanced suite of sensor and software platforms with its wide-ranging portfolio of sensors to enhance its product offering in the three areas to create a range of high value products. Interestingly both TDK and InvenSense are suppliers for Apple.
TDK has been making strategic moves to strengthen its position as a leader in the sensor market. In January 2016, it formed a joint venture company with Qualcomm Inc and named it RF360 Holdings Singapore PTE, Ltd. The joint venture aims to develop radio frequency (RF) front-end modules and filters. RF filters are not only used in smartphones but have use in any gadget that needs to tune in to particular frequencies to communicate viz. drones, robotics, and automotive applications.
In a parallel announcement on December 21, 2016, TDK announced the acquisition of Tronics Microsystems SA through its wholly-owned subsidiary EPCOS AG. Tronics is a technological leader in nano & microsystems and has a portfolio of 25 families of patents. Tronics designs, manufactures and sells custom or standard products to the industry, aeronautics & security, medical, and consumer markets.
Consolidation in the chip manufacturing sector
Slowing sales and fast technological advancement has led to a consolidation amongst chip manufacturers in the semiconductor industry. Some of the big-ticket deals in the last few months include the following:
- MACOM Technology acquired Applied Micro Circuits Corporation on November 21, 2016 for approximately $770 million.
- Siemens AG acquired software firm Mentor Graphics for $4.5 billion on November 15, 2016.
- On November 02, 2016, Chip maker Broadcom acquired Brocade Communication for $5.9 billion.
- Qualcomm Inc. acquired NXP Semiconductors on October 27, 2016 for $38 billion.
- In September 2016, ON Semiconductor acquired Fairchild Semiconductor for $2.4 billion.
On Wednesday, the stock closed the trading session at $12.75, surging 17.62% from its previous closing price of $10.84. A total volume of 35.09 million shares have exchanged hands, which was higher than the 3-month average volume of 1.74 million shares. InvenSense's stock price surged 56.44% in the last month, 67.54% in the past three months, and 99.22% in the previous six months. The stock currently has a market cap of $1.21 billion.
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