Wacker to cash in €1.16bn from Siltronic divestment to GlobalWafers

LONDON (ICIS)–Wacker Chemie will exit the silicon wafers market after divesting its 30.8% stake in Siltronic to GlobalWafers, the German chemicals producer said on Sunday.

According to chemical equity analysts, the €125/share price offered by Taiwan’s GlobalWafers values Wacker’s stake at €1.16bn.

Wacker’s shares shot up more than 5% on Monday; Siltronic’s jumped more than 9%.

Siltronic was a fully-owned Wacker subsidiary before it was listed in 2015, when the market for silicon wafers, used to make semiconductors for the electronics and solar energy panel sectors, was booming; Siltronic had a strong position in China, the world’s largest market.

However, as the solar energy industry expanded rapidly and increased competition in China and the Asia-Pacific region caused sharp fall in silicon wafers’ prices, Siltronic’s prospects worsened.

Siltronic said on Sunday (29 November) that it had been in “intensive negotiations over a number of months” with GlobalWafers. The transaction has yet to be approved by the board of Siltronic, but it can be taken as a given, according to analysts.

Siltronic is an important employer in Burghausen, a Bavarian state in southern Germany. It said the terms of the deal includes a clause whereby GlobalWafers will commit to keep its operations and workforce in Germany unchanged until at least 2025.

“[Under the terms of the agreement] Siltronic can pursue an essentially unchanged business strategy, the social partnership with the employee representatives will be maintained, and there will be no site closures or layoffs of employees for operational reasons in Germany until the end of 2024,” said the producer.

Analysts at Baader Bank said the transaction could be considered a done deal after Wacker described the offer from GlobalWafers as “attractive and appropriate”.

A final decision is expected to be announced next week.

“We reiterate our bullish view on Wacker and reiterate the stock as one of our picks,” said Baader.

Wacker’s stock was trading at €108/share by 12.15 GMT, up 5.73% from the prior close. The share price is a far cry from the lows seen in March as the pandemic hit Europe – at just €33/share.

Siltronic stock has ranged from March lows of €51/share to a range of €80-100/share in the past six months; during November, however, the prospects of an acquisition by GlobalWafers propped up the stock.

The rise culminated on Monday with the official announcement from Siltronic, with an increase of more than 9% to €124/share by 12.15 GMT, practically the proposed buyer’s offer of €125/share.

Front page picture: Silicon wafers used in electronics; archive image
Source: Ralf Hirschberger/EPA/Shutterstock