Taiwan's GlobalWafers in talks to buy silicon-wafer maker Siltronic for 3.75b euros

[NEW YORK] Taiwan's GlobalWafers said it's in advanced talks to acquire Siltronic, a German manufacturer of silicon wafers, for 3.75 billion euros (SUS$6 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 per cent premium to Siltronic's closing share price on Friday. Silitronic said its executive board considers the offer "attractive and appropriate", and added that its largest shareholder Wacker Chemie, which has a 30.8 per cent stake, is prepared to sell at the same price.

"The merger would create a leading player in the wafer industry," Siltronic said in the statement, adding the deal would prohibit job losses in Germany until the end of 2024.

GlobalWafers shares rose 9.8 per cent in Taiwan on Monday. It said it can give no assurance a final transaction will occur and that the deal is subject to regulatory conditions.

The proposed deal, which would be GlobalWafers' largest, would be one of the biggest transactions in the chip industry this year and suggests the companies are looking beyond the pandemic to when businesses begin to return to normal. Siltronic shares have climbed 48 per cent this quarter, driven by expectations that clients will increase purchases of its epitaxial wafers and polished wafers.

The offer will also add to a growing number of semiconductor deals this year that's set to break the highwater mark for chip acquisitions reached in 2016, when US$122 billion in transactions were struck. The largest deal of 2016 was SoftBank Group's US$32 billion purchase of Arm.

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

GlobalWafers shares had gained 32 per cent in the quarter before the announcement, while the Bloomberg World Semiconductor Index added 14 per cent.

Headquartered in Munich, Siltronic is a leading 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 US and other advanced manufacturing countries, had global revenues of 1.3 billion euros in 2019. The stock trades on Germany's MDAX Index.

GlobalWafers, majority-owned by Sino-American Silicon Products, reported 2019 revenue of around NT$58 billion (S$2.72 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.

BLOOMBERG