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Diodes Completed Its Acquisition of Zetex on June 9, 2008

Diodes completed its acquisition of Zetex on June 9, 2008, for 85.45 pence in cash per ordinary share. The closing release valued Zetex’s fully diluted share capital at about US$176 million.
From TheFinanceBase Team2 min to read
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Diodes Incorporated completed its acquisition of Zetex plc on June 9, 2008. Zetex shareholders received 85.45 pence in cash per ordinary share, and Diodes valued Zetex’s fully diluted share capital at approximately US$176 million in its closing announcement.

When did Diodes acquire Zetex?

Diodes announced agreed terms for a recommended acquisition on April 4, 2008, then completed the purchase on June 9, 2008. The company’s closing announcement and Form 8-K identify the transaction as an acquisition of all outstanding ordinary capital stock under an Implementation Deed dated April 4.

How much did Diodes pay for Zetex?

The agreed consideration was 85.45 pence in cash for each Zetex ordinary share. In the June 9 closing announcement, Diodes put the value of Zetex’s fully diluted share capital at approximately US$176 million, using an exchange rate of US$1.9778 per pound sterling.

A later accounting description gives a closely related figure with a different basis: Diodes’ 2009 Form 10-K reported approximately US$176.1 million for the fully diluted valuation, excluding acquisition costs, fees, and expenses. The rounded closing-announcement figure and the later accounting figure should be read with those source dates and descriptions in mind.

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Diodes said the consideration was funded through a combination of its cash resources and financing arrangements, according to its June 9, 2008 Form 8-K.

What did the Zetex acquisition add to Diodes?

In announcing the transaction, Diodes said Zetex would broaden its discrete and analog product range, increase its exposure to industrial and automotive markets, and extend its reach among European customers. The company also cited cross-selling opportunities and the potential to complement its wafer-processing and packaging capabilities. These were Diodes’ stated strategic reasons for the deal, not independent proof that the anticipated benefits were realized.

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Diodes’ closing announcement reported that the two companies had combined 2007 revenue of $528 million. That is a historical figure for the companies’ combined revenue in 2007, as reported in 2008; it is not a current revenue measure.

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What benefits did Diodes expect?

At the time of the closing announcement, Diodes said it expected the acquisition to be accretive within 12 months and pointed to potential revenue, operating, and cost synergies. Those statements were forward-looking expectations. The cited announcements do not establish whether the projected accretion or synergies were subsequently achieved.

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Diodes’ original April 4, 2008 announcement described the proposed strategic rationale; its June 9 closing release confirmed completion and the historical combined-revenue figure.

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