On 11 November, it was announced that the Taiwanese electronic component manufacturer Yageo was to acquire US-based tantalum capacitor manufacturer Kemet. The all-cash purchase price was put at US$1.8Bn. The transaction is expected to be completed in the second half of 2020, at which point Kemet’s common stock will cease to be traded publicly and it will become a wholly-owned subsidiary of Yageo. The price per share of US$27.20 represented a 26% premium over the average for the last 30 days and 37% for the last 90 days.
The announcement took many industry observers by surprise and amounts to almost a reverse takeover, with a single-product capacitor maker (producing multi-layer ceramic capacitors, or MLCCs) buying a broad-range global player.
Kemet is the world’s largest producer of tantalum capacitors and its acquisition of NEC Tokin in April 2017 gave it global leadership in tantalum polymer capacitors and in very small capacitors. It is, therefore, the largest consumer of capacitor-grade tantalum powder in which it is about 60% self-sufficient. Kemet is also a leader in ceramic, film and electrolytic capacitors. Its sales revenue for the FY ending March 2019 were US$1.38Bn, of which tantalum capacitors made up US$0.56Bn.
Yageo is a supplier of mid- and low-end standard MLCCs, along with a wide range of other electronic components. In MLCCs, it is ranked world No. 3 after Murata and SEMCO. It does not currently produce tantalum capacitors. Yageo is listed on the Taiwan Stock Exchange. Total revenue in 2018 was US$2.54Bn, of which MLCCs accounted for 61% (US$1.55Bn).
The integration will enable Yageo to become a one-stop shop for capacitors and other electronic components. On the one hand, the move gives Yageo access to volume customer markets for capacitors. On the other hand, US customers of high-end capacitors for military, medical and other applications usually prefer US-owned, managed and operated suppliers. This acquisition will leave AVX as the only truly US company.
Opinion differs as to how smoothly the transition will be and there is the possibility of culture clash. Some sources suggest that Taiwanese companies have no experience in tantalum capacitors and might allow Kemet to act largely independently. Other sources take the opposite view and consider that Yageo could micro-manage Kemet. Either way, an interesting time lies ahead for Kemet’s existing management.
Roskill’s NEW report, Tantalum: Outlook to 2029, 15th Edition is due to be published in December 2019. Click here to download the brochure and sample pages for the report, or to access further information.