Japan's TDK to acquire Germany's Epcos for $1.9 billion

01 August 2008

Japanese electronics components and digital storage products maker TDK Corp yesterday said it had signed an agreement to acquire German electronic parts manufacturer Epcos AG in a friendly all-cash deal for up to $1.9 billion, which it said it would finance through a bridge loan.

"The purpose of the agreement is to combine EPCOS with TDK's activities in the electronic components field," TDK said in a statement.

The companis say the outlook for the meged entity is very promising given that the components activities of TDK and EPCOS barely overlap and complement each other very well. That holds true technologically as well as with respect to the industries served and the geographical footprint of both parties. Combining the components businesses will enable both companies to concentrate more intensely on strengthening competitiveness and enhancing enterprise value.

'The combination will create an industry-leading global player,'' said Gerhard Pegam, president and CEO of EPCOS.

As a first step, TDK will launch a public tender offer for all outstanding shares of EPCOS and will offer EPCOS' shareholders EUR 17.85 in cash per share, representing a 52 per cent premium over the three-months average closing share price on the Frankfurt Stock Exchange (Xetra) prior to the date of this announcement and a 29 per cent premium over the closing price on 30 July 2008.

Based on the number of EPCOS shares outstanding, this offer would value EPCOS at approx. EUR 1.2 billion equity value. Including net financial liabilities, pension obligations and minority interests this implies an enterprise value for EPCOS of approx. EUR 1.4 billion. TDK currently holds 2.5 per cent of the current registered share capital of EPCOS and has secured delivery of a further 7 per cent.