Kemet Corp., on June 15, announced the completion of its $1.6 billion acquisition by Taiwan’s Yageo Corp. In accordance with the terms of the agreement, Yageo has acquired all of the outstanding shares of Kemet’s common stock for US $27.20 per share in an all-cash transaction. As a result of the deal, Kemet is now a wholly-owned subsidiary of Yageo.
Together with Kemet, Yageo is positioned as a one-stop provider of passive electronic components, including a leading portfolio of polymer, tantalum, ceramic, film and electrolytic capacitors, chip resistors, circuit protection as well as magnetics, sensors and actuators, all addressing a full range of end market segments.
Earlier in June, Yageo executives told shareholders order visibility for the next quarter is vague. According to the Taipei Times, Yageo is stepping up restocking in preparation for demand after the Covid-19 pandemic ends.
The company has forecast double-digit percentage quarterly revenue growth this quarter on recovering customer demand but is uncertain whether the momentum would extend into the second half of the year.
“Because of the pandemic, we do not have clear visibility for the third quarter,” Yageo chairman Pierre Chen told reporters during its annual shareholders meeting.
“I believe Yageo’s revenue and profit will continue to grow after combining [revenue] from Kemet Corp starting from July,” Chen said. The combined company will have an enhanced global footprint and be better able to partner with long-standing, blue chip customers worldwide through a combined 42 manufacturing plants and 14 dedicated R&D centers.
Kemet’s revenue lags Yageo’s but has a higher profit margin. 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.
Kemet’s portfolio will help Yageo ride out volatility in the consumer market, according to the Times. More than 60 percent of Yageo’s revenue is derived from consumer electronics, including smartphones.
Yageo’s priority is to restock, reported the Times. “We cannot install capacity until [demand outlook] becomes clear. We have to plan ahead,” Chen said. “We are hoping to increase inventory to healthy levels, which is about 100 to 110 days. We are still far from that.”
The company aims to increase inventory to between 50 and 60 days by the end of this quarter by doubling its capacity utilization to about 60 percent, compared with a trough of 30 percent in February. Yageo has no plans to move production out of China, which accounts for 70 percent of its capacity.
Yageo reported it is building new R&D and high-end product capacity in Taiwan; plans to invest US$1.05 billion to expand capacity at its plants in Kaohsiung’s Dashe and Nanzih districts; and has started construction of a new plant at the Dafa Industrial Park in Kaohsiung’s Daliao District which would create about 1,900 jobs.
The closing of the Kemet transaction is the culmination of an extensive process by the Kemet board in an effort to enhance value stockholders, said CEO William M. Lowe, Jr. “Kemet as part of the Yageo family will be well positioned to continue as a leading global provider of passive electronic components.”