AMS launched a renewed $5 billion takeover bid for Osram on Thursday, hoping a lower shareholder acceptance requirement will be enough to secure its acquisition of the German lighting company.
The Austrian smartphone sensor supplier is still offering the same price of €41 a share, but it now only needs support from 55% of Osram
shareholders to succeed, compared with the 62.5% approval it had previously required.
In October, only 51.6% of Osram investors backed the offer, including AMS
itself, which accumulated a 20% stake in the business, becoming its largest shareholder in the run up to the vote. Some investors had hoped for a higher offer from private equity firms Bain Capital and Advent , which had previously teamed up to say they were ready to outbid AMS. However, that never emerged and the buyout groups told Osram that they would not be making an offer for the time being.
Alexander Everke, Chief Executive Officer of AMS, said: “Today marks an important milestone for AMS and Osram alike.”
Shares in Osram were trading slightly higher at €40.29 on Thursday morning in London, just below AMS’s offer.
AMS now has to win support from two major investors. These are U.S. hedge fund Sand Grove Capital which built up a 5.75% stake just six days after AMS said it would renew its offer, and Allianz Global Investors, which recently reduced its 9% stake in Osram to just over 5%. The German fund management group, which also owns a 3% stake in AMS, had previously spoken out against Bain’s initial offer of €3.4 billion, saying it amounted to a “knock-down price.”
The Austrian company sees the acquisition of Osram as a way to diversify its portfolio and reduce its reliance on iPhones made by Apple
which accounts for approximately 40% of AMS’s group sales. But that business is increasingly under threat as Apple brings its chip-making capabilities in-house.
By buying Osram, which was spun out of German engineering and technology group Siemens
in 2013, AMS is hoping to offset that risk by further expanding its operations in the automobile sector as a supplier of sensors used in driverless cars.
The bid is being financed with a €4.2 billion bridge loan, which would push net debt in the merged group to 4.3 times earnings before interest, taxes, depreciation and amortisation.
In an attempt to appease trade unions, which had previously opposed the deal because of potential job losses, AMS said on Thursday it would apply an employment protection scheme to guarantee some jobs until the end of 2022 on the sites in Germany.
Shareholders have until December 5 to tender their shares.