Yageo Corporation (IEX:2327) ("Yageo") and KEMET Corporation ("KEMET") (NYSE: KEM) announced that they have entered into a definitive agreement under which Yageo will acquire all of the outstanding shares of KEMET's common stock for US$27.20 per share in an all-cash transaction valued at US $1.8 billion, including the assumption of net debt. The transaction has been approved by the Boards of Directors of both companies.
The purchase price represents a premium of 26% to KEMET's volume weighted average price ("VWAP") for the last 30 trading days and 37% to its VWAP for the last 90 trading days.
The combination of Yageo and KEMET will create an industry leader in the $28 to $32 billion passive components industry, with combined annual revenues of approximately US$3 billion1. Yageo and KEMET each have a proven track record of completing major cross-border acquisitions and believe this transaction will generate greater value for customers and shareholders of both companies.
The acquisition of KEMET will:
Expand Yageo's product portfolio and enhance Yageo's ability to serve as a one-stop product solution to customers serving a range of segments and mission-critical applications;
Enhance Yageo's global footprint with additional operational scale across North America, Europe and Asia with an increased ability to penetrate attractive, high-growth segments and applications;
Drive profitability with meaningful cost synergies and greater efficiencies by leveraging KEMET's structural transformation that resulted in increased and sustainable margins, as well as an enhanced durability of KEMET's revenue base;
Enable Yageo to leverage KEMET's presence and success in Japan through the consolidation synergy of KEMET and TOKIN;
Increase Yageo's presence providing advanced products to the automotive electronics, 5G networking and communications, robotics and automation and industrial segments, including power supply; and
Scale KEMET's business in Greater China and ASEAN region through Yageo's regional presence and sales channels
Financing, Timing and Approvals
The transaction is not subject to a financing contingency. Yageo intends to fund the transaction with a combination of cash on hand and committed financing.
The transaction, which is expected to close in the second half of 2020, is subject to customary closing conditions and the receipt of required regulatory approvals.
Following close of the transaction, KEMET will become a wholly owned subsidiary of Yageo and KEMET's common stock will no longer be listed on any public market.
Citi is serving as financial advisor to Yageo, and Simpson Thacher & Bartlett LLP and Tsar & Tsai Law Firm in Taiwan served as legal advisors. Goldman Sachs & Co. LLC is serving as financial advisor to KEMET and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor.