AMS Rekindles Pursuit of Osram Alongside Strong Earnings
AMS Rekindles Pursuit of Osram Alongside Strong Earnings
(Bloomberg) -- AMS AG rekindled takeover interest in German lighting maker Osram Licht AG just a week after pulling an approach worth 3.7 billion euros ($4.1 billion).
After speaking to financial backers, Austrian sensor maker AMS now thinks that it can "arrange prudent and committed financing for this potential transaction,” it said in its half-year earnings report Tuesday.
Earlier this month AMS said it didn’t see "sufficient basis” for continuing discussions with Osram after doubts emerged about how AMS would fund a takeover of a company the same size as itself.
AMS had proposed paying 38.50 euros a share, Osram revealed in a statement last week after its supervisory and managing boards had already accepted a lower bid worth 3.4 billion-euros from Bain Capital and Carlyle Group LP.
A spokesman for Osram declined to comment Tuesday. In a call with analysts, AMS management declined to comment further on the potential for a deal, with executives saying they would disclose details on financing and partners only if they decide to make an offer.
"If it fulfills our criteria, we’re going to go ahead," AMS Chief Financial Officer Michael Wachsler-Markowitsch said in the call. "We will not comment further on Osram at this time."
AMS’s high leverage -- at six time debt to earnings -- would have meant raising 4.2 billion euros to complete the original deal, according to Bloomberg Intelligence European industry analyst Jawahar Hingorani. AMS has a market value of about $3.8 billion.
In the case where a company already made one failed offer, a new one could only happen after a one-year cool-off period, a spokeswoman for the German Federal Financial Supervisory Authority said in an emailed statement. The target of that offer, in this case Osram, could choose to waive that period.
AMS also posted stronger than expected earnings Tuesday, and expects third quarter revenue to come in between $600 million and $640 million, above the $525.5 million consensus estimate, according to data compiled by Bloomberg.
AMS shares rose as much as 10.2% Tuesday in early trading, the most since July 1. Osram shares were up 3.25%.
The positive news for AMS comes after a warning earlier this year that it would suspend its cash-dividend policy and scrap numerical year-ahead guidance after its first-quarter revenue forecast missed analysts’ estimates.
Both AMS and Osram are suppliers of components to Apple Inc., with AMS supplying sensors used for facial recognition in iPhones, while Osram supplies sensors for the Apple Watch’s heart-rate sensor. Unlike AMS, Osram receives about half its business as a supplier to the automotive industry, and a prolonged weakness in that sector has hurt the company over the past year.
Negotiations to buy Osram have moved slowly since they were first revealed in February. Osram has issued a string of profit warnings, and bidders also had concerns about the impact of the U.S.-China trade war on business. AMS was among a clutch of European semiconductor makers that said they would still keep on supplying to Huawei Technologies Co., after the effects of the U.S. ban continued to ripple across global markets.
To contact the reporters on this story: Andrew Noël in London at anoel@bloomberg.net;Oliver Sachgau in Munich at osachgau@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, ;Giles Turner at gturner35@bloomberg.net, Tara Patel
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