Yageo Corp (國巨), the world’s biggest supplier of chip resistors, yesterday said it has agreed to buy US-based Pulse Electronics for NT$22 billion (US$735.24 million) in cash to expand its product mix and gain access to overseas markets in an amicable takeover, the latest in a slew of mergers and acquisitions launched by Yageo.
The acquisition would expand the company’s product mix to include wireless components, high-end power transformers and power suppliers, chip inductors and network connectors and antennas to create a one-stop shop for clients, Andy Sung (宋志揚), a manager at Yageo’s corporate development department, told a media briefing.
Yageo has about NT$25 billion in cash and the acquisition does not require financing, Sung said.
The addition of Pulse Electronics would improve Yageo’s coverage of niche markets, such as automotive electronics, while the US company’s footprint and distribution channels would help raise Yageo’s visibility globally, he said.
Pulse Electronics has also built up significant brand power in its 70-year history, as well as patents related to 5G wireless networking and electric vehicles, he added.
Pending regulatory approval by authorities in Taiwan and major markets, Yageo could begin to recognize Pulse Electronics’ revenue and profit in the final quarter of this year at the earliest, market observers have said.
The acquisition is expected to boost Yageo’s revenue about 37.3 percent and raise its earnings per share by NT$3.7 based on its current capitalization, they said.
Pulse Electronics last year posted sales of NT$12 billion, of which 44 percent were in China, followed by 32 percent in Europe and 15 percent in North America, Sung said.
Networking equipment accounted for 33 percent of the US company’s sales last year, while wireless communications accounted for 22 percent, power made up 21 percent, industrial components constituted 18 percent and automotive contributed 6 percent, he said.
While Yageo has developed networking and wireless components for the past two decades, the sector accounts for only 2 percent of total sales, he added.
Pulse Electronics in 2015 became a portfolio company under Oaktree Capital Management Inc, which invested US$17 million and subsequently acquired 100 percent of the company, according to Pulse Electronics’ Web site.
Yageo’s announcement came amid rampant speculation that the company would acquire a stake in CMC Magnetic Co Ltd (中環).
CMC shares have rallied 4.69 percent due to the speculation.
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