Vishay Intertechnology has agreed to acquire General Semiconductor Inc. in a $538.9 million stock transaction exchanging half a Vishay share for each General Semiconductor share.
The acquisition, coming four months after Vishay initially made an unsolicited bid to acquire the Melville, NY, company, immediately strengthens the product offerings of the Malvern, Pa., company in rectifiers and diodes, further fulfilling its stated mission to be a one-stop component supplier.
Vishay closed at $24.05 per share in trading on the New York Stock Exchange Tuesday, while General Semiconductor closed at $11.26 Tuesday. Under terms of the transaction, General Semiconductor was valued at $13.54 per share -- a 20% premium over Tuesday's closing price and greater than the $9.51 per share at the time of Vishay's initial bid.
The General Semiconductor acquisition is expected to make Vishay a leading supplier of rectifiers, where it almost no previous visibility, and small-signal diodes, where it had limited visibility, said Felix Zandman, chairman and chief executive of Vishay during a conference call with analysts.
Zandman added that General Semiconductor's strength in power MOSFETs will further strengthen Vishay in that sector, particularly in the automotive market and Far East where General Semiconductor has traditionally been strong.
While the product line synergies between the two companies appear strong, how smoothly Vishay merges General Semiconductor into its fold and benefits financially remains to be seen.
"I'm cautiously optimistic about the acquisition," said Eric Gomberg, an analyst with Thomas Weisel Partners LLC, New York. "There's always a risk during a chaotic market to identify what the sales and profitability will be going forward.
Vishay hopes the acquisition will put life into its earnings, which have dipped during the market downturn."
For the second fiscal quarter ended June 30, Vishay's net earnings were $39 million or 28 cents per share on sales of $383.4 million. But after a $49 million restructuring charge for job cuts and inventory write-offs, net earnings dropped to $3.1 million or 2 cents per share.
By contrast, Vishay earned $131.9 million or 96 cents per share on sales of $612.8 million in the year-ago quarter.
Vishay's acquisitive streak will likely continue, according to Zandman, who said to analysts during the call "Now is the time to acquire companies". When asked who else Vishay could acquire, Zandman replied that a power IC supplier was a possibility.
Earlier in the week, Vishay completed a $120 million acquisition of the infrared components business of Infineon Technologies AG of Munich, Germany, bolstering its offerings in infrared data communications receivers and optocouplers.