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Acquisition of Specialty Semiconductor Producer International Rectifier by Infineon Technologies

Published :2014-08-21

The German chip maker, Infineon Technologies has agreed to acquire a specialty semiconductor producer, the International Rectifier Corporation, for approximately $3 billion in cash to gain greater scale and to bolster its international presence.

This is the biggest merger by Infineon and will give the company a big maker of power-management chips that complements its own product line. It will also strengthen the German manufacturer’s presence in the United States and Asia.

Infineon will pay $40 per share, which is about 50 percent premium to where International Rectifier’s shares closed on Tuesday, under the terms of the deal.

Infineon stated that it expected the deal to add to its earnings per share soon after closing, which is expected late this year or early next year.

Chief executive of Infineon, Reinhard Ploss said that with their great knowledge of specific customer needs and their application understanding, employees of International Rectifier will contribute to Infineon’s strategic development from product thinking to system understanding and system solutions. According to Ploss, the combination of International Rectifier’s and Infineon’s products, technology and innovation, as well as distributional strength will unleash great potential.

Around $2 billion or 1.5 billion euros, in debt financing meant to support the transaction will be provided by Infineon’s financial advisers, Citigroup and Bank of America Merrill Lynch. The German company will also use cash on hand to pay for the transaction, having around 2.3 billion euros as of June 30th, on its balance sheet.

Infineon was advised by the law firms Freshfields Bruckhaus Deringer and Kirkland & Ellis. JPMorgan Chase and the law firm Shriver & Jacobson, Fried, Harris and Frank advised International Rectifier.

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