LONDON Diodes Inc.is to buy U.K.-based Zetex plc, a designer and manufacturer of high performance discrete and analog semiconductor solutions for a broad range of applications, including power management, drivers for LEDs, high performance digital audio solutions and control circuits for broadcasting over satellites.
Diodes (Dallas, TX) which also makes application-specific standard products for discrete and analog semiconductor markets, has made a cash offer for all the issued share capital of Zetex (Oldham, England) through its wholly-owned subsidiary, BidCo. Zetex Shareholders will receive 85.45 pence (about $1.7) in cash for each Zetex Share, valuing the entire issued and to be issued ordinary share capital of Zetex at approximately £89.1 million (about $ 178 million).
This price represents a premium of approximately 96 percent to the Closing Price of a Zetex share on April 3 2008, the last business day prior to the commencement of the offer period and a premium of approximately 27 percent to the average closing price of a Zetex Share for the 12 months ended April 3 2008.
Diodes Inc.'s directors believe that a combination of Zetex and Diodes will create a global provider of analog and discrete semiconductor solutions to the consumer electronics, communications, computing, industrial and automotive markets while Zetex believes that the increased breadth of products, additional market focus and new cross-selling opportunities resulting from the transaction should provide significant benefits for customers and employees of both companies.
“This offer represents significant value for our shareholders,” said Liz Airey, chairman of Zetex. “Diodes is a leading player in the global discrete and analog semiconductor markets. The businesses are complementary in a number of respects, not least in product range and sector focus. The combination will enable the Zetex business to accelerate our growth in Asia Pacific whilst Diodes will benefit from our strength in Europe.”
Keh-Shew Lu, president & CEO of Diodes, added, “This acquisition will accelerate Diodes' broad product platform strategy as Zetex will contribute a range of new discrete and analog products and capabilities that will aid deeper penetration of our key end-markets including consumer, computing and communications. Zetex brings an attractive customer base, which complements our geographical presence and helps expand our addressable markets.”
“We believe this combination will create substantial synergies including excellent cross-selling opportunities, significant economies of scale and cost savings by leveraging Diodes' expertise in manufacturing and packaging,” said Lu.
Diodes' has made a number of acquisitions in recent years including FabTech Inc in Dec 2000, Anachip Corp in Jan 2006 and the net assets of APD Semiconductor Inc in Nov 2006. The company says this has demonstrated its success in integrating acquired businesses and products to realise synergies, enhance product offerings, and roll out solutions and services into new geographic and customer markets.
Diodes' revenues are mostly derived from North America and Asia whereas Zetex derives significant revenues from Europe. In 2007, 4.2 percent of Diodes revenues were derived from European operations, while Zetex derived 36 percent of its revenue from Europe. In Europe Diodes' already has marketing and support offices in Toulouse, France; and Hattenheim, Germany.
Zetex has been in its current form since 2004, when TelemetrixPLC disposed of its two non-core subsidiary businesses, Trend and Network Services, in order to focus its resources on the Zetex semiconductor business. Previously,
Telemetrix Plc, which had floated on the London Stock Exchange in 1984, acquired the Zetex in 1989 changed its name to Zetex plc on April 23, 2004 following the sale of two non-core subsidiary businesses, Trend and Network Services in 2004.
Zetex disposed of its former operating site, Gem Mill, inApril 2007 after transferring its operations to the Zetex Technology Park in Chadderton, England in late 2005. In April 2005 it acquired Mikron AG, a Germansemiconductor design services business specialising in the design and supply of ASICs.
Founded in 1959, Diodes is listed on NASDAQ with a market capitalisation of approximately US$1 billion (on a fully diluted basis) as at 2 April 2, 2008. For the year ended Dec 31, 2007, Diodes reported U.S. GAAP revenues of $401 million. Through organic growth and acquisitions, Diodes achieved year-on-year revenue growth of 59.9 percent and 16.9 per cent in 2006 and 2007, respectively.
Zetex recently said it had increased operating profits by 43 percent to £4.0 million in its financial year to the end of 2007 despite and adverse currency impact of £1.5 million.