Diodes sees M&A as 'hot button' for 2008, CFO says31 January 2008

Diodes, the listed, Texas-based discrete semiconductor maker, views M&A as its "hot button" for 2008, CFO Carl Wertz said.
It could spend as much as USD 700m on an acquisition, he said, and is open to suggestions. The company, with a USD 948m market capitalization, has USD 346m in cash and access to additional credit, Wertz said.
Diodes is looking at buys in all geographies, Wertz said, including Asia and Europe. In the US, it is looking mainly for buys in analog technology, but the company could acquire "anything" in Asia. In Europe, Diodes has had its eye on one company for close to a year and a half, but has not pulled the trigger.
Milpitas, California based IXYS and China-based Jilin Sino-Microelectronics would be interested in hearing from Diodes, sources at the companies said.
IXYS, an analog semiconductor maker, is “very familiar” with Diodes, a company source said, and there could be synergies between the two businesses. Given its market capitalization of USD 244m, and with USD 286m in 2007 revenues, IXYS gets approached often, the source added. IXYS closed Tuesday at USD 7.40 per share, from a 52-week high of USD 11.57 and low of USD 6.20 per share.
Jilin Sino-Microelectronics, a semiconductor power device maker in China, would be interested in hearing from Diodes to see if it had a complementary business, a company source said. “However, as a listed company, it might be difficult for us to introduce Diodes via a sale of Jilin Sino-Microelectronics’s stake. We could consider one of our subsidiaries as a target.” Jilin Sino-Microelectronics has six subsidiaries in the industry. The company makes and sells semiconductor power devices as well as wafer processing. In 2006, the company generated turnover of CNY 892m (USD 112m).
Jilin Sino-Microelectronics (Ji Lin Hua Wei Dian Zi) would be an attractive target for Diodes, a China-based analyst thought. “It makes sense for Diodes to make an acquisition in China. As the largest consumer market of discrete semiconductors in the world, the compound growth rate of the Chinese discrete semiconductor industry would be up to 18% in five years. In China, there are hundreds of discrete semiconductor makers; however, only medium or small size discrete semiconductor manufacturers that are suffering from competition pressure would likely be open to a buyout," he said.
Wertz did not return calls seeking comment on IXYS and Jilin Sino.
The company completed a USD 230m convertible bond offering in October 2006, which could be used for acquisitions, according to a company filing. An industry analyst said it is an open secret that Diodes is looking for buys, but it remains a price sensitive buyer.
Moss Adams LLP is the company's accountant for year ending 31 December 2007. Company director Michael Giordano previously worked as an SVP at UBS.

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