Zeev,
Usually, the market finds hidden value once an owner decides to shop around one of its subs. Perhaps, you'll be pleasantly surprised tomorrow. Unfortunately, I think not.
Ian.
Semibiznews coverage at: semibiznews.com
Wafer supplier MEMC up for sale as majority owner announces merger plans
Semiconductor Business News
(09/27/99, 02:29:25 PM EDT)
ST. PETERS, MO--The majority shareholder of wafer supplier MEMC Electronic Materials Inc. today said it plans to sell its stake in the operation and other businesses as part of huge merger of German industrial conglomerates.
Veba of Dusseldorf currently holds a 71.8% stake in MEMC, the world's fourth largest supplier of raw silicon wafers to the chip makers. Veba and Munich-based Viag AG today announced a merger plan to create a giant supplier of energy and specialty chemicals.
As a result, both Veba and Viag said they plan to divest non-core businesses, which includes MEMC. Veba also said it will sell of its expanding electronics components distribution business--called Veba Electronics--as well as Cablecom and E-Plus business units. VEBA Electronics is based in Santa Clara, Calif., and had revenue of $3.8 billion in 1998. The distribution operation oversees four major U.S. distributors--Impact Technologies, Insight Electronics, Unique Technologies, and Wyle Electronics-as well as the Memec Group, EBV Elektronik, and others in Europe and Asia, and the Atlas logistics organization.
MEMC officials in St. Peters said the wafer supplier company plans to work closely with Veba to effectuate an orderly divestiture and optimize the value of its shares. No timetable was given for the sale of Veba's stake in MEMC, which was increased from about 55% to 71.8% in last spring after the wafer supplier issued a private placement of shares.
Like all other silicon substrate suppliers in the industry, MEMC has suffered huge losses in the past couple of years. It slipped to from the No.2 in wafer material revenues worldwide to No.4 last year, according to analyst Daniel J. Rose of Rose Associates in Los Altos, Calif.
"This [announcement by Veba] must have been a big surprise to MEMC's management, which has been denying rumors that the company was up for sale during the past year," Rose said. "They said nothing about this when I spoke to them in just the recent weeks."
Rose estimated that MEMC had 12.8% of the world's $5.6 billion revenues for raw wafers in 1998. During that year, demand for silicon wafer (based on area) dropped by 9%. In 1998 and 1997 a glut of raw wafers severely depressed substrate prices, causing severe losses at all major suppliers.
Wafer suppliers now face the difficult task of having to invest in new facilities and equipment to make next-generation 300-mm wafers as well as high-quality substrates with fewer surface defects (see feature story from SBN OnLine Magazine).
MEMC's revenues in 1998 dropped 23% to $758.9 million from $986.7 million in the previous year. Its net loss grew to $316.3 million vs. $4.5 million in 1997. So far this year, MEMC has reported a net loss of $89.6 million on sales of $327.8 million in the first six months of 1999.-- Additional reporting by EBN, a sister publication of SBN |
