Siltronic shares jump after $4.5 Billion offer from GlobalWafers

Siltronic AG shares jumped on Monday after Taiwan’s GlobalWafers said it’s in advanced talks to acquire the German silicon wafer manufacturer for 3.75 billion euros ($4.5 billion), adding to a record year for deals in the global semiconductor industry.

GlobalWafers plans to make an offer at 125 euros a share, a 10% premium to Siltronic’s closing share price on Friday. Siltronic said its executive board considers the offer “attractive and appropriate,” and added that its largest shareholder, Wacker Chemie AG, which has a 30.8% stake, is prepared to sell at the same price. Siltronic also said the deal would prohibit job losses in Germany until the end of 2024.

The combined company would be the world’s largest silicon wafer maker by revenue, with a market share of 32% to 35%, said Richard Hsia, an analyst at Fubon Securities Investment Services Co., in a note on Monday. “The deal may fail due to antitrust review, but if a merger is approved, this will be beneficial to GlobalWafers’ shareholders,” he said.

Siltronic shares rose 9.5% to 123 euros at 4:54 p.m. in Frankfurt trading after earlier jumping as much as 12%, their biggest intraday gain since March. GlobalWafers shares increased 9.8% in Taiwan.

The takeover would mark the end of a disposal process from wafers for Wacker Chemie, which began with Siltronic’s public listing in 2015. Wacker at the time retained a majority holding in Siltronic, which it subsequently reduced and now seeks to divest.

The proposed deal would be GlobalWafers’ largest ever, and one of the biggest in the chip industry this year as companies look beyond the pandemic to a return to normal business. The offer will also add to a growing number of semiconductor deals this year that’s set to break the high-water mark for chip acquisitions reached in 2016, when $122 billion in transactions were struck. The largest deal of 2016 was SoftBank $32 billion purchase of Arm.

Competition in the industry is heating up as companies that were once customers, such as Apple Inc., design their own chips and established players like Nvidia branch out into new areas.

Headquartered in Munich, Siltronic is a manufacturer of silicon wafers used in products such as smartphones, computers, navigation and digital displays. The firm, which has production sites and offices in Germany, the U.S. and other advanced manufacturing countries, had global revenues of about 1.3 billion euros in 2019.

GlobalWafers, majority-owned by Sino-American Silicon Products Inc., reported 2019 revenue of around NT$58 billion ($2 billion) and operating income of NT$18 billion.

Siltronic and GlobalWafers expect to announce the deal in the second week of December, following discussion and approval by the boards of both companies. Nomura Holdings Inc. advised GlobalWafers and Credit Suisse AG worked with Siltronic.