Boston, MA 08/22/2214 (wallstreetpr) – Infineon Technologies AG (ETR:IFXA), the largest chipmaker of Germany, agreed that it would acquire International Rectifier Corporation (NYSE:IRF) in a deal worth $3 billion in cash. By acquiring International Rectifier the Germany’s chipmaker would be able to add on further benefit to the technology-based power management business.
About the Deal
As per the agreed terms, Infineon Technologies AG (ETR:IFXA) shall make a payment to International Rectifier as per $40 a share. The deal has been given approval by the Board of both these companies. The amount agreed upon, is 51% over the stock’s closing amount before announcement of the deal on Thursday. As per the data compiled by Bloomberg, this acquisition is said to be the biggest one of Infineon.
In the financial year which ended on June 2014, International Rectifier Corporation (NYSE:IRF) reported that it achieved a 13% increase in the revenue and it totalled to $1.11 billion. The deal, which will be funded by way of only cash and $2 billion line of credit, will remain accretive to the pro-forma EPS in fiscal year, which will end in September 2015.
International Rectifier Corporation’s Acquisition: A Great Benefit to Infineon
The acquisition of International Rectifier Corporation (NYSE:IRF) will put Infineon in the top league of Silicon Valley’s technology hub. The Chief Executive Officer of Infineon Technologies AG (ETR:IFXA), Reinhard Ploss had been chasing this deal since he became the CEO in 2012. He said that it was important for Infineon to make a foothold in the U.S. markets and that too in proximity with the very innovative region of California. He added that acquisition of International Rectifier Corporation will offer this edge.
Consolidation in the Chip-Making Industry
The industry involving chips has been involving a lot of consolidations as the companies are combining and pooling together their resources in order to reach out to the increasing fabrication and designing costs.
In 2013, Avago Technologies Ltd (NASDAQ:AVGO) agreed to acquire LSI Corp (NASDAQ:LSI) in a transaction amounting $6.6 billion.
