Tue, Jul 15, 2014 - Page 14 News List

Capella shares end limit-up after buyout approved

By Kevin Chen  /  Staff reporter

Investors yesterday chased after shares of Capella Microsystems (Taiwan) Inc (凌耀科技), looking for an opportunity to make a profit after the company approved a buyout offer from Germany-based Vishay Intertechnology Inc.

However, active trading in the fabless IC designer’s stock also reflected concern among investors looking for a way out of a company that has seen declining sales and earnings since last year and concern over its loss of orders for light sensor ICs for Samsung Electronics Co’s high-end smartphones.

Capella shares, which trade over the counter, rose by the daily 7 percent limit to close at NT$121.50 yesterday. Over the past 12 months, the stock has declined 29.36 percent, underperforming the GRETAI Securities Market index, which has risen 25.5 percent during the period.

On Friday, Capella announced that its board had approved Vishay’s offer to acquire the company at a price of NT$139 per share, representing a premium of 22 percent over its closing price of NT$114 that day.

Upon the completion of the NT$6.05 billion (US$201.7 million) deal, Capella will become a wholly owned subsidiary of New York Stock Exchange-listed Vishay, one of the world’s largest manufacturers of discrete semiconductors and passive electronic components.

The tender offer began yesterday and is to continue through Sept. 1, with the deal set to be completed by the end of January, Capella said in a statement.

In the first half of the year, Capella reported consolidated sales of NT$545.8 million, down 53.96 percent from NT$1.19 billion in the same period last year.

The company, which has not yet released its second-quarter results, posted a net profit of NT$35.4 million and earnings per share of NT$0.83 in the first quarter, down 71.26 percent from NT$123.17 million and NT$2.91 a year earlier.

While the company has not done particularly well this year, Yuanta Securities Co (元大證券) analyst George Chang (張家麒) believes Capella is a “good takeover target” given its core competencies and a strong balance sheet.

“Although the company has missed some of the recent product cycles at Samsung, it is still considered one of the early movers in the proximity sensor (PS) and ambient light sensor (ALS) space,” Chang said in a client note yesterday, adding that the company is a key microelectromechanical systems (MEMS) sensor supplier that stands to benefit in the era of the Internet of Things.

“In addition, we note that Capella’s cash-to-market capitalization ratio is over 40 percent, making it an ideal M&A [merger and acquisition] target from a valuation perspective,” Chang said.

The Capella-Vishay deal marks the fifth M&A case in Taiwan’s fabless IC industry this year, following the announcement of a deal between Taiwan’s ISSC Technologies Corp (創傑) and the US’ Microchip Technology Inc in May; Integrated Memory Logic Ltd (安恩) and US-based Exar Corp, and FocalTech Corp (敦泰) and Orise Technology Co (旭曜) in April; and MediaTek Inc (聯發科) and MStar Semiconductor Inc (晨星), which was completed on Feb. 1.

Chang said this signals continued consolidation in the domestic IC industry, as many fabless designers like Capella are either too small to compete with the likes of MediaTek or post explosive growth in the same way as Silergy Corp (矽力杰), Parade Technologies Ltd (譜瑞) and Aspeed Technology Inc (信驊).

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