AMS Vows to Pursue Osram Takeover After $4.4 Billion Offer Fails

(Bloomberg) -- AMS AG vowed to keep pursuing the acquisition of German lighting specialist Osram Licht AG after its 4-billion euro ($4.4 billion) bid failed to garner enough support from shareholders.

Osram investors tendered 51.6% of their shares, AMS said Friday in a statement, falling short of a 62.5% threshold set by the Austrian optical sensor maker for the deal to be successful.

Following a months-long takeover battle against private equity suitors, AMS said the combination remains compelling and pledged to continue to “explore strategic options” for a takeover. The Apple Inc. supplier has emerged as the biggest shareholder in Osram, with a 19.99% direct holding.

In a separate statement, Osram said Bain Capital and Advent International are inspecting its books “with a view to submitting an offer.”

The defeat of AMS’s latest bid has extended a protracted period of uncertainty for Osram, already struggling with a market slowdown. AMS last week raised its offer to 41 euros a share from 38.50 euros, catching the rival private equity suitors off guard. The investor pair had been exploring a higher counteroffer after Bain had previously made a 35 euro-a-share offer with Carlyle Group.

“Osram received an indicative offer for takeover by Advent and Bain Capital but as for now, no formal offer has been disclosed,” Morgan Stanley analyst Lucie Carrier said in a note. “We see risks that the Osram share will retreat toward its pre-M&A bids levels unless new announcements are made.”

Osram emerged as a takeover target last year after warning trade friction and a cooling of the car industry had clouded the outlook for 2019. The former division of Siemens AG gets about half of its revenue from the automotive sector. Subsequent profit warnings further eroded investor confidence, sending shares tumbling until the takeover battle took hold.

Osram confirmed talks with Bain and Carlyle in February after they were first reported by Bloomberg News. A bidding war broke out in July when AMS lobbed a higher offer. The Austrian company has drawn criticism from Osram unions and employee representatives on the board, as well as management due to concerns about promised synergies as well as the deal’s financing.

AMS, a supplier of facial recognition technology for Apple’s iPhone, has said it would invest in the company’s Regensburg, Germany site that makes high-tech chip components, but would sell the digital division that makes lighting controls, stage and theater lights.

“We intend to leverage our position as Osram’s largest shareholder in a dialog with Osram as we continue to pursue the full acquisition of the company,” AMS Chief Executive Officer Alexander Everke said in the statement, adding that the deal is intended to keep Europe “at the forefront of optical technology globally.”

Century-old Osram, based in Munich, started out making light bulbs, pivoting in recent years under Chief Executive Officer Olaf Berlien to products like iris scanners and infrared emitters. The refocus was contentious, leading to a boardroom clash over strategy and a public spat with Siemens before the German engineering giant sold down its stake.

--With assistance from Eyk Henning and Sarah Syed.

To contact the reporters on this story: Oliver Sachgau in Munich at osachgau@bloomberg.net;Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editors responsible for this story: Tara Patel at tpatel2@bloomberg.net, Stefan Nicola

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