Vishay to buy General Semiconductor for $538.9 million in stock, plus debt

MALVERN, Pa. -- After initially being rebuffed in a unsolicited takeover bid, Vishay Intertechnology Inc. today announced an agreement to acquire General Semiconductor Inc. for $538.9 million in stock and the assumption of $229.4 million in debt.

The acquisition is expected to be completed by the fourth quarter this year, and it is aimed at greatly extending Vishay's portfolio in discrete semiconductors. General Semiconductor's sales in 2000 totaled $493.7 million, and the Long Island, N.Y.-based company posted a net income of $46.7 million for the year.

"Consolidation is necessary in our industry, and Vishay is well positioned to remain at the forefront of this trend, building on the Infineon and General Semiconductor transactions," said Felix Zandman, chairman and CEO of Vishay in Malvern.

A month ago, Vishay acquired the infrared components business of Germany's Infineon Technologies AG for $120 million (see June 27 story). Vishay, a long-time major supplier of passive components, moved into the discrete and power semiconductor business several years ago, and it greatly expanded its presence when it purchased a large portion of Temic Telefunken microelectronics GmbH in Germany (see March 3, 1998, story). Vishay has $2.5 billion in revenues during 2000.

General Semiconductor in Melville, N.Y., was formed in 1997 when Long Island-based General Instruments Corp. spun off its chip operations. Like most chip companies in the current downturn, General Semiconductor last month posted a sequential drop in revenues for the second quarter--sales fell 17.6% to $84.0 million from $102.0 million in Q1. Its diluted earnings per share were $0.01 vs. $0.12 in the first quarter.

Vishay said the acquisition is expected to be immediately accretive to its earnings and yield "significant operational synergies and cost savings, expected to exceed $50 million annually when fully realized."

"We have complementary product lines, opportunities for substantial savings and greater efficiencies, and the balance sheet to continue to expand opportunistically during the current industry downturn," said Zandman.

General Semiconductor chief executive officer and chairman Ronald A. Ostertag said the acquisition will make his operation much stronger and "able to capitalize on the current difficult environment" for significant growth in the future.

Earlier this spring, General Semiconductor officials rejected Vishay's initial offer of nearly $360 million in stock for the Long Island chip company. Under the current agreement, stockholders of General Semiconductor will receive 0.563 shares of Vishay stock for each share. The value of the transaction is at $13.54 per General Semiconductor share, based on Tuesday's stock market closing prices.