TDK Corp. has proposed an acquisition deal with InvenSense Inc. that values the company $1.3 billion, or $13 per share, which was 20% higher than InvenSense’s Tuesday closing price of $10.84.
The deal is expected to be completed on the second quarter of its fiscal year ending at March 2018 and paid full in cash.
The deal was made so that TDK could strengthen its presence in the sensor systems market. The Japanese company’s acquisition of InvenSense will aid their goal to be a stronger player in the Internet of Things, as well as in the information, automotive, and communications technology.
TDK’s goal is to multiply the segment’s sales 4 times than its current numbers to $1.7 billion (¥200 billion) by March 2021.
So far, the proposal was already approved by the board of directors of both companies, and still awaiting for a regulatory approval.
InvenSense specializes in gyroscopes, which are used on motion-detecting and rotation in 3D space used on most smartphone. These sensor systems help the mobile system indicate whether the device is in horizontal or vertical position. Apple is InvenSense’s biggest customer, comprising at least 11% of their annual sales.
TDK CEO Shigenai Ishiguro said, “We aim to become a strong player in the sensor business with InvenSense as our perfect partner.”
According to reports, InvenSense CEO Behrooz Abdi, will be given a $1 million retention bonus, in exchange, Abdi was asked to stay at the merged entity up until the anniversary of the deal’s completion or the merger agreement.
In a statement, Abdi said, “This is an exciting day for InvenSense as our proposed acquisition by TDK represents what we view as a compelling win for InvenSense’s shareholders, customers and employees. TDK understands the value of InvenSense’s suite of sensor and software platforms. This merger is the culmination of years of innovation and execution by our world-class employees.”
With the news of TDK’s acquisition of InvenSense, the sensory company’s shares climbed by almost 30% during the first reports of the takeover plans. In the New York Stock Exchange, InvenSense shares increase 18% to $12.75 on the afternoon trading. Meanwhile, TDK shares plunged 0.8% in the Tokyo trading the same day.
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