U.S-based passive components supplier Kemet Corporation has been acquired by Taiwan-based components supplier Yageo Corporation in a cash transaction worth $1.8 billion, including the assumption of liabilities.
Under the deal, Yageo will acquire all the outstanding shares of Kemet for $27.20 per share. The deal is has been approved by the boards of both companies and is expected to close in the second calendar quarter of 2020. Kemet will become a wholly owned subsidiary of Yageo.
The deal will create a mammoth, one-stop global provider of passive electronic components, noted Kemet CEO William Lowe during a Tuesday morning conference call with analysts. Lowe stated the two companies have complementary strengths in a wide range of capacitors, including polymer, tantalum, and electrolytic, as well as magnetics, sensors, and actuators. The combined company will have 42 manufacturing plants and 14 dedicated R&D centers.
The combined company will likely stiffen competition with other global passive component suppliers. This includes U.S.-based AVX and Vishay, and Far East suppliers such as TDK and Murata.
The deal was announced a day before the company announced earnings in its second fiscal 2020 quarter ended September 30. In the quarter, Kemet posted a GAAP net loss of $15.3 million, or 26 cents per share, on sales of $327.4 million, compared with net earnings of $37.1 million, or 64 cents per share, on sales of $349.2 million in the year-ago quarter.
Kemet officials said during the conference call that the loss was due largely to one-time legal charges attributed to antitrust litigation against the company. The company said it has settled the litigation, but did not admit wrongdoing.
Like other passive component suppliers, Kemet has been impacted by the electronics industry downturn this year. For the six-month period ended September 30, 2019, net sales were $672.6 million, down from $676.8 million in the same period a year ago. The flat sales reflected not only the industry downturn but also a continuation of extended inventory levels at Kemet’s distributors for some capacitors. One bright spot was large case size ceramics, where revenue for the September quarter rose 24.1% year over year.
For the fourth calendar quarter of 2019, Kemet projects revenue to decline 8 to 13% sequentially, though it expects non-GAAP adjusted gross margin to remain at 30.0% to 32.5% as the company continues to steer its business toward higher margin products.