TDK Corporation and MEMS maker InvenSense entered into a definitive agreement this week with TDK agreeing to acquire all of the outstanding InvenSense shares for cash for a total acquisition price of $1.3 billion. The transaction has been unanimously approved by the Boards of Directors of both companies. Completion of the transaction is expected in second quarter of the fiscal year ending March 31, 2018. According to TDK, this acquisition promotes further growth in sensor and actuator products, which is an important part of the company's strategic growth plan. The transaction brings together a more complete portfolio of sensor and software solutions spanning inertial, pressure, microphone, and ultrasonic sensor products from InvenSense, with TDK's existing pressure, temperature, electric current and various other sensors. The acquisition will be completed through a merger of a newly created subsidiary of TDK with and into InvenSense, with InvenSense continuing following the merger as a wholly-owned subsidiary of TDK.
TDK's current medium-term (3-year) management plan ending in March 2018 focuses on the importance of three areas: a) automotive, b) manufacturing devices and energy, and c) information and communications technology (ICT). As part of its strategy for growth in these key areas, TDK has identified sensors and actuators, energy units, and next-generation electronic components as three product areas for strategic growth aimed at unlocking new business opportunities in the fields of Internet of Things (IoT). Sensors are viewed as an important IoT-enabling technology and TDK envisions greatly expanding this portion of its business and providing a broad range of sensor solutions to its customers. TDK currently sells magnetic sensors that employ thin-film magnetic technology, which TDK has accumulated through its endeavors with hard disk drive (HDD) solutions over many years. Further, TDK's existing product line includes pressure, temperature, electric current, and various other sensor types, and TDK plans to expand its sensor business going forward.
Through the acquisition of InvenSense, TDK will be able to strengthen its product line-ups and technologies, which is expected to enable the combined company to become a stronger player in broad based sensor solutions for IoT, automotive, and ICT by accelerating the sensor product roadmap to offer innovative next generation products and platforms. In addition, sensor fusion and the combination of various sensor technologies and software creates products with enhanced value solutions for customers across multiple fields.
InvenSense is mostly known for its flagship MEMS based six-axis and nine-axis motion sensors, which are used in some of the world's most advanced consumer products and applications. In recent years its portfolio has expanded with additional solutions for inertial, environmental, microphone, and ultrasonic sensors. InvenSense's "fabless" manufacturing model enables development of high-performance and cost effective products via its unique CMOS-MEMS production process. InvenSense is a provider of sensors for consumer devices including smartphones, drones, wearables, gaming, inertial navigation, and both optical and electronic image stabilization for cameras. Looking ahead, growth avenues beyond mobile include large addressable opportunities in the fields of IoT, automotive, and industrial, driven by increasing consumer demand of indoor navigation, virtual reality (VR), augmented reality (AR), and advanced driver assistance systems (ADAS).
In January 2016, TDK established a joint venture with Qualcomm, called RF360 Holdings Singapore PTE, Ltd., and has also entered into agreements to expand technical cooperation in a wide range of fields including passive components, batteries, wireless power transfer, sensors, MEMS, and various other next-generation technologies for mobile communications, IoT, and automotive. This joint venture presents an opportunity for InvenSense to expand its customer base in ICT (information and communications technology), IoT, and automotive areas.
TDK's President and CEO, Mr. Shigenao Ishiguro, made the following statement regarding the acquisition: "TDK's sensor business, one of its strategic growth areas, can be strengthened by merging TDK's portfolio of magnetic sensor technologies (where its strength lies) and its wide range of sensor products with InvenSense's expanding sensor technology. This acquisition is a fundamental element in TDK's strategy to provide unique and high-value-added products and services in IoT. We aim to become a strong player in the sensor business with InvenSense as our perfect partner."
InvenSense's President and CEO Behrooz Abdi made the following comment: "This is an exciting day for InvenSense as our proposed acquisition by TDK represents what we view as a compelling win for InvenSense's shareholders, customers and employees. TDK understands the value of InvenSense's suite of sensor and software platforms. This merger is the culmination of years of innovation and execution by our world-class employees. Together with TDK, we see a bright future that leverages our commitment to innovation with TDK's scale, significant partner relationships and distribution channel. Our strategic goals are aligned, and we are confident that together with TDK we will accelerate our roadmap to provide next-generation sensor technologies in key fields for the world's most innovative companies."
In connection with the acquisition, BofA Merrill Lynch is acting as TDK's exclusive financial advisor and Jones Day is acting as legal counsel to TDK. Qatalyst Partners is acting as exclusive financial advisor and Pillsbury Winthrop Shaw Pittman LLP is acting as legal counsel to InvenSense.
TDK Corporation is a leading electronics company based in Tokyo, Japan. It was established in 1935 to commercialize ferrite, a key material in electronic and magnetic products. TDK's portfolio includes electronic components, modules, and systems marketed under the product brands TDK and EPCOS, power supplies, magnetic application products as well as energy devices, flash memory application devices, and others. In fiscal 2016, TDK posted total sales of approximately $11.5 billion and employed about 92,000 people worldwide.
InvenSense provides MEMS sensor platforms. InvenSense's vision targets the consumer electronics and industrial areas with integrated motion and sound sensing solutions. InvenSense's solutions combine MEMS based sensors, such as accelerometers, gyroscopes, compasses, and microphones with proprietary algorithms and firmware that process and calibrate the output of sensors, maximizing performance and accuracy. InvenSense is headquartered in San Jose, California.
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