Aurora Optoelectronics, a Chinese manufacturer of fibre optic products, is paying Rmb7.2 billion ($1.1 billion) for a controlling stake in Dutch semiconductor manufacturer Ampleon, making a rare overseas play in an otherwise quiet year for Chinese outbound mergers and acquisitions.
That said, it's buying the stake from state-backed investment fund China Jianyin Investment.
The transaction will see Shanghai-listed Aurora Optoelectronics take control of the company, which was spun off from NXP Semiconductors (formerly Philips Semiconductors and currently the subject of a takeover bid from Qualcomm) in 2015, as well as its 1,250 employees globally.
Aurora Optoelectronics is buying a 77.41% stake from China Jianyin Investment, which acquired Ampleon for $1.8 billion two years ago, potentially putting the asset back in private hands.
The company believes the acquisition of Ampleon will leave it in a better position to expand its 5G mobile network in China. In particular, Ampleon’s prowess making RF power semiconductor devices (such as power amplifiers, passives, switches, and duplexers) is crucial if China is to develop 5G technology in line with international standards, the company said in a statement, explaining its reasons for the buyout.
Shanxi-based Aurora Optoelectronics said it will settle the transaction entirely by issuing new shares.
According to the deal terms, the company will settle $750 million of the agreed payment by issuing 460 million new shares to Jianyin Investment at Rmb15.88 per share -- a discount of 8.7% against its last closing price of Rmb17.4.
At the same time, Aurora Optoelectronics will conduct a private placement of shares to raise about $350 million for the remainder that is due.
Altogether, the transaction will value privately-held Ampleon at around $1.4 billion.
Big in RF
Ampleon is the world’s second-largest manufacturer of RF power semiconductor devices, which are widely used in the aerospace, automotive, military, medical, and telecommunication industries. The company has a 24.1% global market share in 2015 and runs offices in the US, Netherlands, France, Sweden, Finland, China, South Korea, Taiwan, and the Philippines.
Among its customers are some of the world’s leading electronics manufacturers including China’s Huawei and ZTE, South Korea’s Samsung Electronics and LG, as well as Hitachi and Nippon Electric in Japan.
The previous big deal involving a Chinese buyer and a European asset was China Investment Corporation’s $14 billion takeover of European warehouse firm Logicor in June. Yet technically the Ampleon acquisition is not considered an outbound deal because Aurora is buying from a Chinese seller.
Aurora said the transaction is subject to approvals from China’s securities regulator and company shareholders, as well as antitrust regulators including China’s Ministry of Commerce and the European Commission.