MUNICH, Germany Epcos, one of the world’s largest manufacturers of passive electronic components, is looking to sell its tantalum capacitors operations and has stared negotiations with U.S. capacitor maker Kemet for a suitable deal.
The sale of its tantalum activities – and thus a part of its business with standard components – is a further step in the reorganization and repositioning of Epcos' business that started last year.
The Munich, Germany headquartered company said it is seeking to reorganize because of the huge overcapacity in and pressure on prices on may of its lines.
The various offers and discussions with potential buyers, but most recently Kemet, has valued the tantalum business below the book value of the assets, so any sale will represent a write-down of between Euros 40 and 50 million.
The company says discussions with Kemet are at an ‘advanced stage’ and expects the proceeds from the sale will accrue in its 2006 fiscal year, and then improve the net cash flow by at least Euros 70 million.
Epcos already manufactures over half its passive components in low-cost countries. The company operates ten manufacturing sites in Asia, six of them in China. The Surface Acoustic Wave Components segment has completed the transfer of its entire multimedia business to Asia.
Last month the company set up a joint venture with Chinese conglomerate Xiamen Xindeco Co., Ltd. to manufacture aluminum electrolytic capacitors
The company has also started focusing more on customer- and application-specific products and solutions. For instance, in 2004 the ferrites activities were streamlined and repositioned, and the unit now focuses on specific end-user sectors, notably the automotive and industrial electronics and in telecommunications businesses.