Littelfuse, Inc., and IXYS Corporation on September 8, announced that they have entered into a definitive agreement under which Littelfuse will acquire all of the outstanding shares of IXYS in a cash and stock transaction. The transaction represents an equity value of approximately $750 million and enterprise value of $655 million. Under the terms of the agreement, each IXYS stockholder will be entitled to elect to receive, per IXYS share, either $23.00 in cash or 0.1265 of a share of Littelfuse common stock, subject to proration. In total, 50% of IXYS stock will be converted into the cash election option and 50% into the stock election option.
IXYS is a global pioneer in the power semiconductor and integrated circuit markets with a focus on medium to high voltage power control semiconductors across the industrial, communications, consumer and medical markets. IXYS has a broad customer base, serving more than 3,500 customers through its direct salesforce and global distribution partners. IXYS reported revenues of $322 million in its fiscal 2017 with an adjusted EBITDA margin of approximately 13.5%.
The combined company is expected to have annual revenues of approximately $1.5 billion, with the following compelling strategic and financial benefits:
- Broader technology platform and capability to expand growth into industrial and electronics markets
- Increased long-term penetration of power control portfolio in automotive markets, expanding global content per vehicle
- Heightened engineering expertise and intellectual property around high voltage and silicon carbide semiconductor technologies
- Increased presence in the semiconductor industry, adding to our scale and volume
- Strong relationships and complementary overlap in major global electronics distribution partnerships enabling cross-selling
- Immediately accretive to adjusted EPS and free cash flow post transaction close (2)
- Expect to generate more than $30 million in annualized cost savings; additional future value created from revenue synergies and tax rate reduction
“As the largest acquisition in our 90-year history, this is an exciting milestone for Littelfuse,” said Dave Heinzmann, President and Chief Executive Officer, Littelfuse. “IXYS’ extensive power semiconductor portfolio and technology expertise fit squarely within our strategy to accelerate our growth within power control and industrial OEM markets. The combination of Littelfuse and IXYS unites complementary capabilities, cultures and relationships.”
“IXYS will operate as the cornerstone of the combined companies’ power semiconductor business,” said Dr. Nathan Zommer, Chairman and Chief Executive Officer of IXYS. “Both Littelfuse and IXYS have long histories of innovation and customer-focused product development, and together, we will embrace the entrepreneurial spirit that has contributed to IXYS’ success in the power semiconductor and integrated circuits market.”
“The combination of IXYS and Littelfuse creates a stronger player in the power semiconductor industry, with the ability to leverage our collective resources and portfolio to create increased value for our customers,” added Uzi Sasson, President and Chief Executive Officer of IXYS. “We believe that being a part of a world-class organization like Littelfuse will provide a bright future for IXYS and the talented people at our respective companies.”
The transaction is expected to be immediately accretive to Littelfuse’s adjusted earnings per share and free cash flow in the first full year post transaction close, excluding any acquisition and integration related costs. Littelfuse expects to achieve more than $30 million of annualized cost savings within the first two years after closing the transaction. Longer term, the combination is also expected to create significant revenue synergy opportunities given the companies’ complementary offerings, as well as benefits from future tax rate reduction.
In conjunction with the definitive agreement, Dr. Nathan Zommer, IXYS founder and currently the company’s largest stockholder with approximately 21% ownership, has entered into a voting and support agreement. Subject to the agreement’s terms and conditions, he has agreed to vote his shares in favor of the transaction. After close of the transaction, Dr. Zommer is expected to join Littelfuse’s Board of Directors, subject to the board’s governance and approval process. His technical skills and extensive experience across the semiconductor industry will benefit the combined company with its integration efforts, innovation roadmap and revenue expansion.
The transaction is expected to close in the first calendar quarter of 2018 and is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by IXYS stockholders. Littelfuse expects to finance the cash portion of the transaction consideration through a combination of existing cash and additional debt.
Morgan Stanley & Co. LLC is serving as financial advisor and Wachtell, Lipton, Rosen & Katz is serving as legal counsel to Littelfuse. Needham & Company, LLC is serving as financial advisor and Latham & Watkins LLP is serving as legal counsel to IXYS.
Conference Call and Webcast Information
Littelfuse will hold a conference call for investors on Monday, August 28, 2017 at 8am Central/9am Eastern to discuss this announcement. The call will be broadcast live and can be accessed at www.Littelfuse.com.