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Infineon Technologies AG to buy International Rectifier Corporation

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Staff writer ▼ | August 22, 2014
Infineon Technologies AG will acquire International Rectifier Corporation for $40 per share in an all-cash transaction valued at approximately $3 billion.
Infineon
3 billion in cash   Infineon will give $40 per share
The acquisition combines two semiconductor companies with leadership positions in power management technology. By the integration of International Rectifier, Infineon complements its offerings and will be able to provide customers with an even broader range of innovative products and services. Infineon will also benefit significantly from greater economies of scale as well as a larger regional footprint.

The International Rectifier board of directors and Infineon's supervisory board have approved the transaction. The closing of the transaction is subject to regulatory approvals in various jurisdictions and customary closing conditions, as well as approval of International Rectifier stockholders. The transaction is expected to close late in the calendar year 2014 or early in the calendar year 2015 subject to regulatory approval.

The acquisition is expected to be accretive to pro-forma earnings per share (EPS) already in the fiscal year of closing. Synergies are expected to drive significant accretion going forward, building on International Rectifier's existing successful operational restructuring.

In the second full fiscal year of operation after closing, International Rectifier's margin contribution is expected to be at least in line with Infineon's target of 15 percent Segment Result margin over the cycle. As such, Infineon maintains its target of 15 percent average-cycle Segment Result margin.

Under the terms and conditions of the agreement, Infineon will pay $40 per share in cash for all of International Rectifier's outstanding shares, representing a fully diluted enterprise value of approximately $2.4 billion.

The transaction price represents a premium of approximately 47,7 percent over the average share price of International Rectifier during the last three months and a premium of approximately 50,6 percent over the closing share price of International Rectifier on August 19, 2014.

Infineon will fund the transaction using cash-on-hand and fully underwritten credit facilities of 1.5 billion euros in total. Upon closing of the transaction, Infineon's capital structure should stay well within the previously communicated targets of 30 to 40 percent gross cash-to-revenue, no more than 2x gross debt-to-EBITDA and a positive net cash position.


 

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