Infineon agrees to buy Int'l Rectifier for $3 billion in cash

Wed Aug 20, 2014 2:30pm EDT
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By Jens Hack and Maria Sheahan

MUNICH/FRANKFURT (Reuters) - Merger-shy German chipmaker Infineon has agreed to buy California-based International Rectifier for about $3 billion in cash, Infineon said on Wednesday, in its biggest-ever acquisition.

Terms call for it to pay $40 per share for the U.S. company, a maker of power-management circuits used in everything from computers to appliances, automobiles, lighting and aircraft.Shares of International Rectifier rose as high as $39.50 following the news. At 1800 GMT, the stock was trading at $39.06, a gain of $12.51 or 47 percent on the day on the New York Stock Exchange.

Infineon shares fell 1.72 percent in after-hours trade on the Frankfurt exchange. The stock had closed down 1.38 percent ahead of the announcement, while those of several possible targets, including International Rectifier rose, following reports that Infineon was preparing to buy a U.S. chipmaker.

Infineon, whose chips activate car airbags, enable cruise control, manage power supplies and cut vehicle emissions, has shunned major takeovers since it was spun off from engineering conglomerate Siemens in 1999. It struggled in the subsequent years to turn a profit in its slumping memory-chip business, which it then disposed of.

Infineon said the merger would complement its own range of high-powered chips with International Rectifier's low-power, energy efficient chips. Infineon said its combined market share of the fragmented power semiconductor market would grow to 17.2 percent from 11.8 percent as a standalone company, based on 2012 revenue figures. Toshiba and Mitsubishi would have just 7 percent of the market on the same basis.

The merger will help the combined company cut operating costs and increase the utilisation of its heavy investment in 300 millimetre wafer production plants in Dresden and Villach, Austria. It will also boost Infineon's presence in U.S. and Asian markets outside Korea, where the company is already active, Infineon said.

PRESSURE FOR A DEAL   Continued...

The headquarters of German semiconductor manufacturer Infineon are pictured in Neubiberg near Munich, January 28, 2014. REUTERS/Michael Dalder