Osram (OSRn.DE) announced on Monday that it was considering a takeover by the Austrian sensor manufacturer AMS (AMS.S), which would offer a competing offer from Bain and Carlyle (CG.O) with a cash offer of 4,3 billion euros for the German lighting company surpasses.
With the acquisition of Osram, a leader in automotive lighting technology, whose share price has been adversely affected by profit warnings, doubts about its strategy and a weak car market, AMS could become a global heavyweight in the sensor and photonics sectors.
Osram called the acquisition plan of AMS "binding and sustainable". Osram added that a stable environment for high-tech change is as important as the protection of the company's employees.
The bid would outperform Bain Capital and Carlyle's 4 billion bid, recommended by Osram's board of directors but rated as too low by its largest shareholder, Allianz Global Investors.
AMS strives to specialize in sensors for self-driving cars to reduce dependence on Apple (AAPL.O). According to analyst estimates, these account for around 40% of sales.
"The transaction is strategically convincing as it creates the world's leading provider of sensor solutions and photonics for consumer, automotive, industrial and medical applications," said Alexander Everke, Chief Executive of AMS.
“Together we will master the broadest portfolio of optical sensors and photonics in the industry,” he said in a conference call on Monday.
Osram's shares rose by up to 12% earlier in the day, outperforming Bain and Carlyle's offer of 35 Euro per share for a short time, but remained below the offer of AMS from 38,50 Euro. They closed 10,4% higher at 34,95 Euro.
The shares of the AMS listed in Switzerland fell by 11,8%. According to Vontobel analysts, the transaction would increase AMS 'risk profile and value creation will depend heavily on synergies AMS expects to exceed 300 million euros a year.
The proposed takeover bid by AMS is underpinned by a bridging loan signed by UBS (UBSG.S) and HSBC (HSBA.L) of 4,2 billion euros, which AMS intends to refinance by issuing debt and equity, including the absorption of 1,5 billion Euro of new equity.
Osram factory - LED production. Image Osram
A spokesman for Bain and Carlyle declined to comment.
Prehistory
AMS had already shown interest in Osram in June and signed a confidentiality agreement to gain access to due diligence. This included a clause stating that AMS would not take another takeover attempt on Osram within 12 months. At that time, AMS did not make an offer and reversed within a few days as the funding was insufficient.
After the financing is completed, AMS has Osram up to the 15. August gave up the standstill agreement and announced that they would make an official offer. Osram said it would cancel the agreement if the negotiations were successful.
Analysts have previously questioned the logic of AMS 'interest in Osram, which requires AMS to outsource or sell Osram's non-semiconductor activities for a deal to make sense.
They also expressed concern over the indebtedness of the Austrian group and the difficulty in diversifying Apple into fierce competition, global trade tensions and rapid technological developments.
Investor discomforts are reflected in AMS 'share price, which is 30% lower than in the previous year.
The influential trade union IG Metall, which had welcomed Bain and Carlyle's bid, criticized AMS for its repeated approach, saying that it compromised the credibility of the sensor manufacturer.
SENSORS FOR CARS
AMS is trying to address these concerns by strengthening the auto business. Sensors are already being developed to record roads and control gear levers and chassis in autonomous vehicles. It said a year ago that it had teamed up with "a global pioneer in autonomous driving platforms," and it has repeatedly stressed that industry interest has increased.
Osram uses LEDs and laser chips for locking and unlocking cars. At the beginning of the month, they joined Recogni, a Silicon Valley start-up specializing in artificial intelligence for driverless cars.
AMS is aiming for an increase in the revenue share of the automotive business to 35-40% when the total amount of 10% in the acquisition of Osram has expired.
Reporting by Kirsti Knolle, Francois Murphy in VIENNA, Alexander Huebner and Joern Poltz in MUNICH and Kanishka Singh in BENGALURU; Additional reporting by Tom Sims; Editing by Bill Rigby, Georgina Prodhan, Kirsten Donovan Source and images: Reuters Translation: Institute for Rare Earths and Metals
