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GlobalWafers Agrees to Buy Siltronic for About $4.5 Billion

(Bloomberg) -- Taiwan’s GlobalWafers Co. agreed to acquire German silicon wafer manufacturer Siltronic AG for about 3.75 billion euros ($4.53 billion), yet another deal in a record year for the global semiconductor industry.

GlobalWafers will pay 125 euros a share, a 10% premium to Siltronic’s closing price Nov. 27, the day before public disclosure of acquisition talks, the companies said Wednesday in a statement. The two companies had disclosed earlier they were in discussions, sending shares in both companies surging.

Siltronic’s shares rose 1.2% to 127 euros in early trading on Thursday. GlobalWafer’s shares fell as much as 8.8%.

Siltronic said at the time its executive board considered the offer “attractive and appropriate,” and that its largest shareholder, Wacker Chemie AG, which has a 30.8% stake, is prepared to sell its stake. GlobalWafers has promised not to lay off employees or close any Siltronic site in Germany before the end of 2024, the Taiwanese company’s Chairwoman and Chief Executive Officer Doris Hsu said Thursday. The two companies currently have 20 factories in 10 countries, she added.

”Siltronic can help bolster GlobalWafers’ capability in 5G, power and Internet of Things,” Hsu said in an interview, adding the deal will also help her company accelerate the development of more advanced, compound-based semiconductor technology.

The companies said they expect the deal to be completed in the second half of 2021. Hsu said GlobalWafers is confident the deal will pass regulatory reviews.

The combined company would be the world’s largest silicon wafer maker by revenue, with a market share of 32% to 35%, said Richard Hsia, an analyst at Fubon Securities Investment Services Co.

The takeover would mark the end of a disposal process from wafers for Wacker Chemie, which began with Siltronic’s public listing in 2015. Wacker at the time retained a majority holding in Siltronic, which it subsequently reduced and now seeks to divest.

The proposed deal would be GlobalWafers’ largest ever, and one of the biggest in the chip industry this year as companies look beyond the pandemic to a return to normal business. The offer will also add to a growing number of semiconductor deals this year that’s set to break the high-water mark for chip acquisitions reached in 2016, when $122 billion in transactions were struck. The largest deal of 2016 was SoftBank Group Corp.’s $32 billion purchase of Arm.

Competition in the industry is heating up as companies that were once customers, such as Apple Inc., design their own chips and established players like Nvidia Corp. branch out into new areas.

Headquartered in Munich, Siltronic is a leading manufacturer of silicon wafers used in products such as smartphones, computers, navigation and digital displays. The firm, which has production sites and offices in Germany, the U.S. and other advanced manufacturing countries, had global revenues of about 1.3 billion euros in 2019.

GlobalWafers, majority-owned by Sino-American Silicon Products Inc., reported 2019 revenue of around NT$58 billion ($2 billion) and operating income of NT$18 billion.

Nomura Holdings Inc. advised GlobalWafers and Credit Suisse Group AG worked with Siltronic.

(Updates with shares, GlobalWafers CEO’s comments from third paragraph and GlobalWafers share price in 11th paragraph)

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