After the appalling mess Blackstone and KKR have made of their acquisitions Freescale and NXP, it beggars belief that another semiconductor company can be welcoming the advances of a private equity company.
But here’s Infineon getting into a tortuous deal with the American private equity company Apollo.
The tortuous deal could lead to Apollo getting 29 per cent of Infineon on the cheap.
The wheeze is that Infineon offers a rights issue and, if any of the shares on offer aren’t taken up, Apollo gets them up for €2.15 apiece.
If Apollo gets them all at €2.15, it will have picked up 29% of Infineon for $700m
For all I know, Apollo has already got a stack of Infineon shares because they were as cheap as 38 Eurocents in March and have shot up to over €2.60 in the last three months. Someone’s been buying.
If, through its underwriting of the rights issue, and its possible existing share-holdings, Apollo ends up with 30% of Infineon’s shares, it is obliged by German law to make a bid for the whole company.
If it can get away with the €2.15 price tag for all the shares, Apollo will have bought Infineon for around €2 billion, compared to the $11 billion valuation put on NXP by KKR, and the $17.6 billion valuation put on Freescale by Blackstone.
And then what will happen? Well that’s a no-brainer. Infineon will either be asset-stripped, or loaded up with huge debts, or very likely both.
For all those great engineers and dedicated souls who have made Infineon into a great engineering company, this is a terrible prospect.
For top management it will, very likely, be a lucrative bonanza.