Siltronic Said to Attract Takeover Interest From China Group

  • National Silicon Industry Group said to contact Wacker Chemie
  • Deal may face hurdles over lack of premium, political backlash

China’s National Silicon Industry Group, a state-backed semiconductor investment fund, is interested in acquiring a majority stake in German silicon-wafer maker Siltronic AG, the latest potential Chinese takeover that could face political opposition, according to people familiar with the matter.

The group, known as NSIG, has contacted Wacker Chemie AG about potentially acquiring the Munich-based chemical maker’s 58 percent stake in Siltronic, said the people, who asked not to be identified because discussions are private. The deal faces several hurdles including the Chinese fund’s unwillingness to pay a premium to the current market value and growing resistance among German and U.S. officials to allow Chinese purchases of semiconductor-related assets, the people said.

Wacker Chemie may be reluctant to sell, particularly at a low price, and discussions are at an early stage, the people said. Siltronic has also drawn interest from other Chinese bidders, the people said. If NSIG does agree to buy the 58 percent stake, it would normally be required to make an offer to remaining shareholders under German rules.

Siltronic shares jumped as much as 6.6 percent in Frankfurt after the takeover interest was reported. The stock gained 2.7 percent to 40 euros at 12:36 p.m. local time, a record high. The shares have risen 77 percent this year, giving the company a market value of about 1.2 billion euros ($1.3 billion).

A representative for NSIG couldn’t be immediately reached for comment. Wacker Chemie is still seeking to reduce its stake in Siltronic “in the medium term,” Christof Bachmair, a company spokesman, said by phone on Friday. He declined to comment further. A representative for Siltronic declined to comment.

NSIG, which was established in 2015 by China to invest in firms that make equipment and materials for semiconductors, has made investments in Europe this year including Finnish silicon wafer producer Okmetic Oyj. Last year, Wacker Chemie spun off Siltronic, the third-biggest maker of the hyper-pure silicon wafers used by chipmakers, to focus on its chemicals and poly-silicon divisions.

Siltronic, which employs about 3,800 people, has production sites in Germany, Singapore and Portland, Oregon. Its silicon wafers are used to make the chips found in consumer goods including mobile phones, laptops and cars, and its customers include Samsung Electronics Co. and Texas Instruments Inc., according to a company presentation.

The U.S. government is poised to block the Chinese takeover of German semiconductor supplier Aixtron SE, people familiar with the matter said. Germany’s economy minister has also called for European Union measures to give national governments greater powers to block deals. The election of Donald Trump as the next U.S. president has some advisers telling Chinese acquirers to pause overseas dealmaking until he clarifies his position on cross-boarder deals.

On top of that, Chinese regulators plan to generally bar megadeals of $10 billion or more, people with knowledge of the matter said this week. The moves at home and abroad could slow China’s $234 billion wave of overseas deals announced this year.

— With assistance by Yuan Gao

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