On Semi to buy Sanyo semicon arm

LONDON: It has been announced that Sanyo Electric Co. Ltd. will sell its loss-making semiconductor subsidiary to On Semiconductor Corp. for $366 million. The sale will be made in a mix of stock and cash, and the amount that has been arrived at is more than had been previously predicted.

The acquisition, which is expected to done by the end of this year, will allow On Semi to increase its manufacturing scale, broaden its product portfolio and expand its presence in the Japanese market and give On Semi annual sales of about $3.5 billion.

The deal is subject to adjustment pursuant to the terms of the transaction. For the last quarter, Sanyo Semiconductor's annualized revenue was approximately $1.2 billion.

This move allows On Semi to add microcontrollers and ASIC capabilities as well as power modules and motor control to the company portfolio. Sanyo supplies many consumer, automotive and industrial end-markets. Sources say that On Semi hopes to combine these complementary businesses and improve the scope of their global reach. They are keen to strengthen company presence in the Asia-Pacific region.

The sources also said that On Semi has by now completed seven acquisitions and is now familiar with successfully integrating acquired businesses, and reaching optimum manufacturing and operational efficiencies. They confirmed that the company was keen to have Sanyo as a shareholder and have a desire to have a long term collaborative relationship with the veteran company.

According to the terms arrived at, Sanyo Electric is expected to receive approximately $129 million (Â¥11.6 billion) in cash and approximately $238 million (Â¥21.4 billion) worth of On Semi common stock, which approximately equals 7 to 8 % of ON Semi's fully diluted shares outstanding, subject to adjustment at closing. On Semi has the option to replace the stock consideration with cash at closing.