Infineon Technologies and International Rectifier announced that they have signed a definitive agreement under which Infineon will acquire International Rectifier for $3 Billion in cash ($40/Share). The acquisition will combine two semiconductor companies with leadership positions in power management technology. By the integration of International Rectifier, Infineon complements its offerings and will be able to provide customers with a broader semiconductor product portfolio, a stronger distribution and regional presence. On the other hand, International Rectifier will benefit from Infineon’s products and technologies, manufacturing and operational excellence and R&D.
International Rectifier’s expertise in low-power, energy-efficient IGBTs and Intelligent Power Modules, Power MOSFETs and Digital Power Management ICs will integrate well with Infineon’s offering in power devices and modules. With International Rectifier, Infineon acquires an advanced manufacturer in Gallium Nitride on Silicon (GaN) based power semiconductors. This combination will accelerate and solidify Infineon’s position in GaN discretes and GaN system solutions, improving its ability to pursue this strategically important technology platform with significant future growth potential. It will also result in a broad range of products creating a comprehensive provider in the market for silicon-, silicon-carbide- and gallium-nitride-based power devices and integrated circuits (ICs). The increase in exposure to the distribution channel will allow Infineon to meet the needs of a broader range of customers.
The International Rectifier Board of Directors and Infineon’s Supervisory Board have approved the transaction and is expected to close late in the calendar year 2014 or early in the calendar year 2015 subject to regulatory approval. It is also expected to drive significant accretion going forward, building on International Rectifier’s existing successful operational restructuring. In the second full fiscal year of operation after closing, International Rectifier’s margin contribution is expected to be at least in line with Infineon’s target of 15 percent Segment Result margin over the cycle. As such, Infineon maintains its target of 15 percent average-cycle Segment Result margin.
Under the terms and conditions of the agreement, Infineon will pay US-Dollar 40 per share in cash for all of International Rectifier’s outstanding shares, representing a fully diluted enterprise value of approximately US-Dollar 2.4 billion. The transaction price represents a premium of approximately 47,7 percent over the average share price of International Rectifier during the last three months and a premium of approximately 50,6 percent over the closing share price of International Rectifier on August 19, 2014.Infineon will fund the transaction using cash-on-hand and fully underwritten credit facilities of Euro 1.5 billion in total. Upon closing of the transaction, Infineon’s capital structure should stay well within the previously communicated targets of 30 to 40 percent gross cash-to-revenue, no more than 2x gross debt-to-EBITDA and a positive net cash position.
