Magnachip to be acquired by Wise Rose Capital for $1.4 bln Acquisition price represents 75% premium to chipmaker’s 3-month average share price

Translated by Ryu Ho-joung 공개 2021-03-31 08:27:55

이 기사는 2021년 03월 31일 08:09 thebell 에 표출된 기사입니다.

Chinese private equity firm Wise Road Capital will buy Magnachip Semiconductor in a cash deal worth $1.4 billion, with booming demand for computer chips boosting the South Korean chipmaker’s value.

The company, which provides display and power solutions, announced on Monday that it had agreed to sell itself to Wise Rose Capital. Under terms of the deal, Magnachip shareholders will receive $29 in cash for each share they own. The private equity firm will take the company private after the acquisition is completed.

The acquisition price represents a 75% premium to Magnachip’s three-month volume-weighted average share price and a 54% premium to the company’s closing price on March 2, the last trading day before media reports of a potential transaction. The deal also values the company at more than 28 times its 2020 earnings before interest, tax, depreciation and amortization, which stood at $49 million.

This contrasts with a control premium ranging between 20% and 30% in typical buyout deals. Booming chip demand and Magnachip’s solid position in the display driver market have helped boost the value of the company, industry watchers said. Magnachip is the second largest player in the market after Samsung Electronics.

“Even taking into consideration the booming chip industry, a 75% premium seems significantly high,” said an industry insider. “This indicates the buyer’s strong interest in the company’s technology.”

It is also notable that Magnachip has been given such a high value without the foundry business. The company offloaded its foundry operations last year to a private equity fund backed by SK Hynix for 530 billion won ($467 million).

“This transaction is in the best interests of all of our stakeholders, including shareholders, customers and employees. It will provide an excellent opportunity to accelerate our MX 3.0 growth strategy,” said YJ Kim, Magnachip’s chief executive officer.

He added, “Given their deep industry expertise, Wise Road Capital is an ideal partner for Magnachip.” The private equity firm is part of the consortium that bought Dutch chipmaker NXP’s discrete component business – now named Nexperia – for $3.6 billion in 2017.

The deal has raised concerns among some critics over a possible technology leak. The transaction is expected to close in the second half of this year subject to regulatory and shareholder approvals. (Reporting by Hye-ran Kim)
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