Austrian sensor specialist AMS triggers bidding war for Osram

The acquisition makes sense for AMS since it sees synergy with Osram sensor solutions and photonics businesses especially in the emerging self-driving market.

Austrian sensor specialist AMS’ offer to acquire Germany’s Osram has trigerred a bidding war for the German lighting group. AMS stated, it was ready to pay $3.8 billion, 10% more than Bain Capital and Carlyle offer amount.

AMS plans on reducing its dependency on Apple Inc, to which it supplies sensors for facial recognition purposes; it is investing heavily in self-driving car technology.

German lighting giant Osram, grappling with weakness in the automotive industry as well as a broader economic slowdown, became a potential takeover target given its potential as a supplier for connected and autonomous cars.

Bain and Carlyle have bid 35 euros for Osram’s share and has gained the backing of the Munich group’s managing and supervisory boards. The bidding is set to close on September 5. However, Osram’s biggest shareholder AllianzGI, which owns a 9.3% stake, along with a small group of shareholders have rejected the offer saying it is too low.

AMS has countered Bain and Carlyle offer with an all-cash takeover offer priced at 38.50 euros per share. Including debt, its offer values Osram at 4.3 billion euros.

In June AMS had already shown interest in Osram and in order to gain access to due diligence it signed a confidentiality agreement which includes a 12-month standstill agreement. At that time, AMS had receded since it did not have access to sufficient financing.

On Sunday, it provided Osram with a finance plan saying it would wait until August 15 for Osram to waive the standstill agreement, after which it will make an official offer.

“The proposal is compelling for all stakeholders of Osram,” said AMS Chief Executive Alexander Everke. “Therefore, we trust that Osram will waive the standstill agreement and allow its shareholders to benefit from our offer.”

AMS’ bid includes a 4.2 billion euro bridge loan underwritten by UBS and HSBC which it plans to refinance by issuing debt and equity, including raising 1.5 billion euros of new equity, “primarily” through a rights issue.

“The combination of AMS and Osram creates a global leader in sensor solutions and photonics with approximately 5 billion euros of revenue,” said AMS. “The transaction enables AMS to enhance its sensor solutions and photonics offering in terms of performance, size, energy efficiency and costs.”

According to analysts, the deal would only make sense if the Austrian firm were to divest its non-semiconductor business from the merger.

In a statement AMS said, it views Osram’s digital division, part of Osram’s attempt to become a high-tech group that builds chips, provides digital lighting systems and supplies sensors and other components – as non-core, adding that it would seek “the best owner” for the division.

($1 = 0.8930 euros)

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