Infineon Technologies AG to Acquire International Rectifier Corporation for US-Dollar 40 per share, approximately US-Dollar 3 billion in cash
August 20, 2014
Acquisition creates a highly complementary and innovative
semiconductor product portfolio, distribution strength and a stronger
Integration complements Infineon’s expertise in power
semiconductors and adds system know-how in power conversion, while
expanding its expertise in compound semiconductors (Gallium Nitride on
Silicon) and driving greater economies of scale in production.
US-Dollar 40 per share in cash to be paid for all International
Rectifier outstanding shares, representing a premium of approximately
48 percent over the average share price of International Rectifier
during the last three months and a premium of approximately 51 percent
over the closing share price of International Rectifier on August 19,
Transaction expected to be accretive to pro-forma EPS within the
first fiscal year of closing and margin contribution should be at
least in line with Infineon’s average-cycle target of 15 percent at
the latest within the second full fiscal year after closing.
Transaction will be financed by additional debt and
cash-on-hand, further optimizing Infineon’s capital structure.
MUNICH & EL SEGUNDO, Calif.--(BUSINESS WIRE)--
Infineon Technologies AG (FSE: IFX / OTCQX: IFNNY) and International
Rectifier Corporation (NYSE: IRF) today announced that they have signed
a definitive agreement under which Infineon will acquire International
Rectifier for US-Dollar 40 per share in an all-cash transaction valued
at approximately US-Dollar 3 billion. The acquisition combines 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 an
even broader range of innovative products and services. Infineon will
also benefit significantly from greater economies of scale as well as a
larger regional footprint.
Dr. Reinhard Ploss, CEO of Infineon Technologies AG, said: “The
acquisition of International Rectifier is a unique opportunity. With
their great knowledge of specific customer needs and their application
understanding, International Rectifier employees will contribute to
Infineon’s strategic development from product thinking to system
understanding and system solutions. The combination of Infineon’s and
International Rectifier’s products, technological and innovative
excellence, as well as distributional strength will unleash great
Oleg Khaykin, President and CEO of International Rectifier, said: “This
transaction provides significant value to our stockholders and opens new
strategic opportunities for both our customers and employees. By
combining two complementary providers in power management solutions,
International Rectifier will benefit from Infineon’s products and
technologies, manufacturing and operational excellence and greater R&D
The International Rectifier Board of Directors and Infineon’s
Supervisory Board have approved the transaction. The closing of the
transaction is subject to regulatory approvals in various jurisdictions
and customary closing conditions, as well as approval of International
Rectifier stockholders. The transaction is expected to close late in the
calendar year 2014 or early in the calendar year 2015 subject to
The acquisition is expected to be accretive to pro-forma earnings per
share (EPS) already in the fiscal year of closing. Synergies are
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
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 48 percent over the average share price of
International Rectifier during the last three months and a premium of
approximately 51 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.
Infineon’s and International Rectifier’s product portfolios are highly
complementary. 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
The transaction will 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 integration of International Rectifier will generate economies of
scale through optimization of the combined entity’s operating expense
structure and through the acceleration of the ramp-up of Infineon’s
leading 300-millimeter thin wafer manufacturing capability.
Infineon will also have a much broader and stronger regional scope.
International Rectifier has a strong presence in the US, the important
center of innovation especially in the Connected World, and will also
help to improve Infineon’s position in Asia. The increase in exposure to
the distribution channel will allow Infineon to meet the needs of a
broader range of customers.
The Euro 1.5 billion of credit facilities for Infineon have been fully
underwritten by Bank of America Merrill Lynch International Limited and
Citigroup Global Markets Limited, who are also acting as financial
advisors to Infineon. JPMorgan is acting as exclusive financial advisor
to International Rectifier. Kirkland & Ellis and Freshfields Bruckhaus
Deringer are acting as counsel for Infineon whilst Fried, Frank, Harris,
Shriver & Jacobson is acting as counsel for International Rectifier.
About International Rectifier
International Rectifier Corporation (NYSE: IRF) is a world leader in
power management technology. IR’s analog, digital, and mixed signal ICs,
and other advanced power management products, enable high performance
computing and save energy in a wide variety of business and consumer
applications. Leading manufacturers of computers, energy efficient
appliances, lighting, automobiles, satellites, aircraft, and defense
systems rely on IR’s power management solutions to power their next
generation products. For more information go to www.irf.com.
InfineonTechnologies AG, Munich, Germany, offers semiconductor and system
solutions addressing three central challenges to modern society: energy
In the 2013 fiscal year (ending September 30), the company reported
sales of Euro 3.84 billion with close to 26,700 employees worldwide.
Infineon is listed on the Frankfurt Stock Exchange (ticker symbol: IFX)
and in the USA on the over-the-counter market OTCQX International
Premier (ticker symbol: IFNNY).
This press release contains forward-looking statements about the
business, financial condition and earnings performance of the Infineon
These statements are based on assumptions and projections resting upon
currently available information and present estimates. They are subject
to a multitude of uncertainties and risks. Actual business development
may therefore differ materially from what has been expected.
Beyond disclosure requirements stipulated by law, Infineon does not
undertake any obligation to update forward-looking statements.
International Rectifier Corporation
This document includes statements that constitute “forward-looking
statements”, which may be identified by words such as ‘will’, ‘expect’,
‘should’, ‘could’, ‘shall’ and similar expressions. These statements are
subject to risks and uncertainties concerning Infineon's proposed
acquisition of International Rectifier and actual results and events
could differ materially from what presently is expected. The potential
risks and uncertainties include the possibility that the transaction
will not close or that the closing may be delayed; the possibility that
the conditions to the closing of the transaction may not be satisfied;
the risk that competing offers will be made; the transaction may involve
unexpected costs, liabilities or delays; the outcome of any legal
proceedings related to the transaction; the occurrence of any event,
change or other circumstances that could give rise to the termination of
the merger agreement; general economic conditions; conditions in the
markets Infineon and International Rectifier are engaged in; behavior of
customers, suppliers and competitors (including their reaction to the
transaction); and specific risk factors discussed in other releases and
public filings made by International Rectifier (including its filings
with the SEC). This list of factors is not intended to be exhaustive.
Such forward-looking statements only speak as of the date of this press
release, and we assume no obligation to update any written or oral
forward-looking statement made by us or on our behalf as a result of new
information, future events, or other factors.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
In connection with the proposed transaction, International Rectifier
will file a proxy statement with the Securities and Exchange Commission
(SEC). INTERNATIONAL RECTIFIER STOCKHOLDERS ARE ADVISED TO READ THE
PROXY STATEMENT CAREFULLY WHEN IT BECOMES AVAILABLE BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION. Investors may obtain a free copy of the
proxy statement (when it becomes available) and other relevant documents
filed by International Rectifier with the SEC at the SEC’s Web site at http://www.sec.gov.
The proxy statement and such other documents filed by International
Rectifier with the SEC may also be obtained for free from the Investor
Relations section of International Rectifier’s web site (www.irf.com)
or by contacting International Rectifier investor relations by mail at
Attn: Investor Relations, 101 North Sepulveda Boulevard, El Segundo,
International Rectifier and its directors, executive officers and other
members of its management may be deemed to be participants in the
solicitation of proxies from International Rectifier’s stockholders in
connection with the proposed transaction. Information concerning the
interests of International Rectifier’s participants in the solicitation,
which may be different than those of International Rectifier’s
stockholders generally, is set forth in International Rectifier’s proxy
statement relating to its 2013 annual meeting of stockholders filed with
the SEC on September 25, 2013. Additional information regarding the
interests of those deemed participants in the proposed transaction will
be included in the proxy statement in connection with the proposed
transaction and other relevant documents to be filed with the SEC. These
documents may be obtained free of charge from the SEC’s website at www.sec.gov
and International Rectifier’s website at www.irf.com.