Merger-shy German chip maker Infineon has agreed to buy Silicon Valley-based International Rectifier for about $3-billion (U.S.) in cash, Infineon said on Wednesday, in its biggest ever acquisition.
Terms call for it to pay $40 per share for the U.S. company, a maker of power-supply chips. The deal has been approved by International Rectifier’s board and is expected to close late in 2014 or early in 2015, subject to regulatory approvals, Infineon said.
Shares of International Rectifier rose to $39.15 following the news, a gain of $12.59 or 47 per cent on the day on the New York Stock Exchange.
Infineon shares had closed down 1.38 per cent ahead of the announcement. Its shares had dipped, while those of several possible targets rose, following reports that the Munich-based firm was preparing to buy a U.S. chip maker.
Infineon said the acquisition is expected to start boosting its reported earnings per share by the end of the fiscal year in which the deal closes.
Based on International Rectifier’s current restructuring of operations, it added that in the second full fiscal year after closing International Rectifier’s profit margins would be “at least in line with” Infineon’s projected multiyear margin targets of 15 per cent.
Infineon, whose chips activate car airbags, enable cruise control, manage power supplies and cut vehicle emissions, has shunned major takeovers since it was spun off from engineering conglomerate Siemens in 1999, as it struggled for years to turn a profit at a memory-chip unit it previously owned.
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