German chip supplier Siltronic facing a billion-dollar sale


The prospect of a multi-billion dollar sale of the German chip supplier Siltronic to Taiwan is electrifying the stock market. The shares of the former Wacker-Chemie subsidiary jumped nine percent on Monday, but remained below the total of 3.75 billion euros of the takeover offer of the competitor GlobalWafers, which wants to offer 125 euros per share, at 124 euros. GlobalWafers stocks closed 9.8 percent higher on the Taipei Stock Exchange.

Number three and four on the world market for wafers – silicon wafers from which chips are punched – could together attack the Japanese market leader Shin-Etsu. Siltronic’s major shareholder Wacker can look forward to billions in proceeds: He is ready to sell his stake of 30.8 percent to the Taiwanese company.

The takeover offer for the company listed in the MDax is only eleven percent higher than last Friday’s closing price. The share jumped around 50 percent in November alone after the prospects for the chip industry brightened and the Siltronic board of directors was more confident for 2021. Negotiations with GlobalWafers had been going on for months, and none of them had leaked to the media. The Taiwanese even had to improve their offer in view of the price jumps, as it was called in business circles.

Siltronic was advised by the Swiss investment bank Credit Suisse. It had only raised its price target for Siltronic shares from EUR 100 to EUR 124 on Friday and confirmed its “outperform” rating. CS technology analyst Achal Sultania justified his assessment with the prospect of higher prices; there is no mention of a possible takeover in the study. The bank and the German financial regulator BaFin did not comment on this.

One trader said he was excited to see what the federal government said about the plans. Technology migration from Germany is actually not wanted. Siltronic is the only European among the five big wafer manufacturers who share 90 percent of the world market and who can also produce 300 millimeter silicon wafers – and thus have the latest technology. Shin-Etsu is the market leader with around 30 percent. GlobalWafers is in third place with 17 percent, Siltronic in fourth place with 13 percent. With the takeover, the two would at least overtake number two, Sumco from Japan. Last year, GlobalWafers achieved sales of two billion dollars (around 1.7 billion euros), while Siltronic achieved 1.3 billion euros. However, sales and prices have been under pressure since the corona pandemic. Economies of scale are trump cards in the competitive and cyclical market.

The Siltronic executive board assessed the offer from Taiwan as “attractive and appropriate,” Wacker Chemie said. The family company, which is currently in the process of restructuring and downsizing, could accrue 1.15 billion euros if the stake were sold. The Wacker share rose more than six percent to an annual high of 108.65 euros. Wacker had the subsidiary listed on the stock exchange in 2015 because the company did not want to participate in the hectic ups and downs of the semiconductor industry. In 2017, Wacker gave up the majority. The supervisory boards of all three companies still have to approve the takeover in the second week of December, after which the official offer should be submitted.

According to the Munich-based company, GlobalWafers does not want to change anything in the Siltronic strategy. The works in Burghausen in Bavaria and Freiberg in Saxony are guaranteed until the end of 2024. Until then, layoffs for operational reasons are also excluded. The company employs around 3,700 people, almost two thirds of them in Germany.

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