GlobalWafers in talks to buy Siltronic for 3.75 billion euros

New York

TAIWAN'S GlobalWafers Co said that it's in advanced talks to acquire Siltronic AG, a German manufacturer of silicon wafers, for 3.75 billion euros (S$6 billion), adding to a record year for deals in the global semiconductor industry.

GlobalWafers plans to make an offer at 125 euros a share, a 10 per cent premium to Siltronic's closing share price on Friday.

Siltronic said its executive board considers the offer "attractive and appropriate", and added that its largest shareholder Wacker Chemie AG, which has a 30.8 per cent stake, is prepared to sell at the same price.

"The merger would create a leading player in the wafer industry," Siltronic said in the statement, adding that the deal would prohibit job losses in Germany until the end of 2024.

GlobalWafers said it can give no assurance that a final transaction will occur and that the deal is subject to regulatory conditions.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The proposed deal, which would be GlobalWafers' largest, would be one of the biggest transactions in the chip industry this year and suggests that the companies are looking beyond the Covid-19 pandemic to when businesses begin to return to normal.

Siltronic shares have climbed 48 per cent this quarter, driven by expectations that clients will increase purchases of its epitaxial wafers and polished wafers.

The offer will also add to a growing number of semiconductor deals this year that's set to break the highwater mark for chip acquisitions reached in 2016, when US$122 billion in transactions were struck. The largest deal of 2016 was SoftBank Group Corp's US$32 billion purchase of Arm.

Competition in the industry is heating up as companies that were once customers, such as Apple Inc, design their own chips and established players like Nvidia branch out into new areas.

Headquartered in Munich, Siltronic is a leading manufacturer of silicon wafers used in products such as smartphones, computers, navigation and digital displays.

The firm, which has production sites and offices in Germany, the US and other advanced manufacturing countries, had global revenues of 1.3 billion euros in 2019. The stock trades on Germany's MDAX Index.

GlobalWafers, majority-owned by Sino-American Silicon Products Inc, reported 2019 revenue of around NT$58 billion (S$2.7 billion) and operating income of NT$18 billion.

Siltronic and GlobalWafers expect to announce the deal in the second week of December, following discussion and approval by the boards of both companies. BLOOMBERG