Yageo Corp. and Kemet Corp. today announced that they have entered into a definitive agreement under which Yageo will acquire all the outstanding shares of Kemet’s common stock for US$27.20 per share in an all-cash transaction valued at US $1.8 billion, including the assumption of net debt.
The move will combine two powers in the interconnect, passives and electromechanical components (IP&E) space into a $3 billion operation. Yageo is a leading manufacturer of connectors, and Kemet is a leading supplier of capacitors.
The merger will:
- Expand Yageo’s product portfolio and enhance Yageo’s ability to serve as a one-stop product solution to customers serving a range of segments and mission-critical applications;
- Enhance Yageo’s global footprint with additional operational scale across North America, Europe and Asia with an increased ability to penetrate attractive, high-growth segments and applications;
- Drive profitability with meaningful cost synergies and greater efficiencies by leveraging Kemet’s structural transformation that resulted in increased and sustainable margins, as well as an enhanced durability of Kemet’s revenue base;
- Enable Yageo to leverage Kemet’s presence and success in Japan through the consolidation synergy of Kemet and TOKIN;
- Increase Yageo’s presence providing advanced products to the automotive electronics, 5G networking and communications, robotics and automation and industrial segments, including power supply; and
- Scale Kemet’s business in Greater China and ASEAN region through Yageo’s regional presence and sales channels.
The transaction has been approved by the boards of directors of both companies.
The electronics supply chain is a bit unsettled by the news as mergers sometimes have unintended consequences. If products are duplicated, one brand usually goes away. That may cause obsolescence issues for some customers. Kemet and Yageo also have a diverse group of distributors; channel roster are often pared down after an M&A.
Established in 1919 and headquartered in Fort Lauderdale, Florida, Kemet is a leading global supplier of high-end electronic components with a global footprint that includes 23 manufacturing facilities and approximately 14,000 employees located in 22 countries in the Americas, Asia and Europe. Kemet’s main products include tantalum capacitors, ceramic capacitors, magnetic, sensors and actuators, and film and electrolytic capacitors. Kemet’s products serve a number of applications, such as advanced automotive electronics, industrial applications, aerospace, medical, as well as smartphones, cloud/networking equipment, wireless communications, alternative energy and 5G technology. Holding more than 1,600 patents and trademarks worldwide, Kemet has established a leading position for its products via its advanced R&D and technical staff and design-in capabilities.
Pierre Chen, Chairman and Chief Executive Officer of Yageo, said, “Kemet has remarkable technology innovation capabilities and a proven track record of integrating cross-border acquisitions. We have been following their success with great admiration and look forward to creating a new legacy for the combined company. Kemet gives us the extraordinary opportunity to combine our strengths to achieve synergies in product and technology offerings as well as geographic coverage. The integration will enhance our ability to serve customers in consumer electronics as well as in the high-end automotive, industrial, aerospace, telecom and medical sectors. I look forward to partnering with Kemet's employees to drive future growth and deliver enhanced value for our shareholders and customers.”
Yageo’s common stock is listed on the Taiwan Stock Exchange under the ticker symbol “2327” (TAIEX: 2327 TW). Yageo is a leading global electronic component company with capabilities on a global scale, including production and sales facilities in Asia, Europe and the Americas. The company provides one-stop-shopping, offering its complete product portfolio of resistors, capacitors, wireless and circuit protection components to meet the diverse requirements of customers. Additional information about Yageo can be found at http://www.yageo.com.
The deal is expected to close in the second half of 2020.