Kemet Shares Surge Following $1.8 Billion Bid From Taiwan’s Yageo

7:48 AM, Nov 12, 2019 — Taiwan’s Yageo said on Monday that it has agreed to acquire its US rival Kemet (KEM) for $1.8 billion in an all-cash deal, strengthening its position as a global electronic component manufacturer.

The price tag inclusive of net debt represents a 26% premium to Kemet’s volume-weighted average price for the last 30 trading days, according to a statement. The takeover will be funded via cash on hand and committed financing.

Set up in 1919, Kemet’s global footprint currently includes 23 manufacturing units in 22 countries across the Americas, Asia, and Europe. The merged entity will own 42 production facilities and 14 research and development centers, positioning itself as a “one-stop provider” in the $28 billion passive electronic components industry, including polymer and chip resistors as well as magnetics and sensors.

The acquisition will also drive profitability by achieving “meaningful” cost synergies and greater efficiencies, leveraging Kemet’s recent structural transformation that led to its higher margins and a durable revenue base.

“Kemet gives us the extraordinary opportunity to combine our strengths to achieve synergies in product and technology offerings as well as geographic coverage,” Pierre Chen, chief executive officer of Yageo said. “The integration will enhance our ability to serve customers in consumer electronics as well as in the high-end automotive, aerospace, and medical sectors.”

The deal, which is subject to regulatory approvals, is expected to close in the second half of next year.

Shares of Kemet traded 12% higher in early trade.

Companies: Kemet Corporation
Price: 25.96 Price Change: +2.94 Percent Change: +12.77

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