Acquisitions have shaped the global passive electronic component industry over the past 25 years. In fact, based on Paumanok Publications, Inc. estimates, approximately $6,105 million U.S. dollars in cumulative capacitor related asset value has changed hands during that time period (including components and raw materials See Figure 1), and approximately $2,250 million U.S. dollars in cumulative linear and non-linear resistor assets have also changed hands during the same time period (See Figure 2).
Source: Compiled From the Paumanok Archives Transaction value and revenues will differ. Revenues and Asset value of peripheral components other than CAPACITORS have been excluded from valuations.
Are there Patterns in the Timing of Acquisitions?
A close look at the myriad of transactions that have taken place in the passive component market over the past 25 years reveals some interesting patterns.
- Vishay is the most active acquirer of companies in both capacitors and resistors; and is in fact a pioneer in developing conglomerates by yoking like component groupings together in harmony. Part of the Vishay strategy in fact creates part of the pattern, if Vishay can identify an asset who it can make more profitable by having it come under the Vishay corporate umbrella through the combination of SGA or by moving all or part of production to another part of the conglomerate, in a low cost region of the world, than that asset becomes a target for takeover.
- Companies are more likely to want to buy target acquisitions during times of great cash infusion into the market to reduce taxable income, but the target companies are less likely to sell at such times because they are too distracted keeping up with orders rather than looking for a formulated and immediate exit strategy. Subsequently, the famines which usually follow feasts in the global passive component industry occur at the time when targeted vendors wish to exit and when acquirers actually commit to transactions. The reader will note the increase in M&A activity in both capacitors (Figure 1) and resistors (Figure 2) between 2000 and 2003 that supports this theory.
- Regardless, transactions are continual, and it can be argued that since 1998 those assets have been changing hands on a frequent and continual basis in both the capacitor and resistor industries.
- Acquisitions can be influenced by outside forces threatening the market, especially those involving disruptive technologies.
Source: Compiled From the Paumanok Archives Includes LINEAR AND NON-LINEAR RESISTORS. Transaction value and revenues will differ. Revenues and Asset value of peripheral components other than RESISTORS have been excluded from valuations.
Acquisitions in Capacitors:
The following section of this article describes the global acquisitions in the capacitor industry as noted in Figure 1 and also the related raw materials being acquired.
The Tantalum Supply Chain:
Our research for this MarketEYE article has revealed that the majority of transactions impacting the capacitor industry have been related to tantalum between 1990 and 2014. Tantalum has been the focal point of many transactions related to electronic components and raw materials (45% of all capacitor and material related transactions between 1990 and 2014 were related to the tantalum supply chain according to our estimates).
- Interestingly enough, this process began with the acquisition of Sprague Capacitor by Vishay Intertechnology in 1992. At the time Vishay’s strategy was to expand from their positioning in resistors to create a broad dielectric solution in capacitors in an attempt to be more attractive to distributors.
- This was preceded by a technology-based acquisition by HC Starck (a Bayer AG subsidiary at the time) of V-Tech, a Japanese producer of capacitor grade tantalum metal powder.
- In 2001, Vishay decided to add to Sprague’s positioning in the value-added and application specific tantalum capacitor market through the strategic acquisition of both Tansitor and NACC Mallory.
- In 2002, Cabot Corporation purchased a controlling interest in their Japanese joint venture with Showa-Denko Corporation, (which can also be considered a technology-based acquisition because it increased Cabot’s capabilities to produce high CV/g capacitor grade powders).
- In 2005, KEMET Corporation purchased the tantalum division of EPCOS AG located in Evora, Portugal to increase its positioning in conductive polymer tantalum capacitors;
- This was followed in the same year by Nichicon Corporation, one of the world’s largest manufacturers of aluminum electrolytic capacitors, who purchased the tantalum division of Panasonic Industrial Corporation.
- In 2007, KEMET Corporation purchased the plastic film capacitor producer, Arcotronics, which included the coveted Towcester UK tantalum wet capacitor operations.
- Also in 2007, Bayer AG sold its H.C. Starck operations (capacitor grade tantalum metal powder and wire producer) to Advent and Carlyle (two financial concerns).
- In 2008, Vishay Intertechnology purchased the Towcester wet tantalum capacitor operations from KEMET Corporation, further enhancing the Vishay strategy of dominating the value-added and application specific tantalum capacitor markets worldwide.
- In 2009, Panasonic merged with Sanyo Corporation, which brought Panasonic back into the tantalum capacitor business, which it had exited in 2005.
- Also, in 2009, there was the creation of Exxelia in France, which includes Firadec as a founding company; which is France’s premier producer of tantalum capacitors.
- Also, in 2009 there was HolyStone’s purchase of Hitachi AIC’s tantalum capacitor line.
- In 2011, Global Advanced Metals purchases the Cabot Supermetals business, which includes massive capacitor grade tantalum powder production sites in the U.S. and Japan, under the control of the same company that owns the world’s largest tantalum ore resources in Australia (i.e. GAM , formerly Sons of Gwalia).
- In 2012, there was even more activity in tantalum, with KEMET’S purchase of Niotan, a capacitor grade tantalum metal powder producer in the USA; followed by KEMET’S purchase of the Tokin business of NEC Corporation in Japan, Asia’s largest producer of tantalum capacitors, and this was followed by AVX Corporation’s purchase of Nichicon Corporation’s tantalum capacitor operations (which previously had been owned by Panasonic and sold to Nichicon in 2005).
- In 2014, further consolidation in the tantalum supply chain was the result after Vishay announced the purchase of HolyStone’s Polytech Company, which was formerly the tantalum operation of Hitachi AIC.
The Ceramic Supply Chain:
Acquisitions impacting the ceramic capacitor supply chain accounted for an estimated 31% of all capacitor and related material acquisitions between 1990 and 2014 as follows-
- The first major acquisition in the ceramic capacitor supply chain during this time period was Vishay’s acquisition of Vitramon from Thomas & Betts in 1994. Vishay purchased Vitramon in an attempt to continue its strategy of being a “one-stop shop” in passive components and subsequently being more attractive to distributors. The purchase of Vitramon expanded the captive product offering of Vishay from tantalum and film into ceramic capacitors.
- This was followed in 1998 by Ferro Corporation’s purchase of TAM Ceramics from Cookson. The combination of Ferro’s existing Transelco facility with the acquired TAM Ceramics facility gave Ferro a significant command over the merchant market for ceramic dielectric materials.
- During the same year, DMC2 purchased the captive ceramic dielectric materials operations of Philips Electronics located in Uden, Holland. At the time the Uden facility specialized in the production of ceramic dielectric materials for high capacitance MLCC development (Kudos in hindsight to DMC2 for seeing that high capacitance MLCC was to be the next big thing in capacitors and related materials).
- In 2000, there was the major purchase of the ceramic capacitor operations of Philips Electronics (known as Phycomp) by Yageo Corporation in Taiwan- ROC.
- In 2001, Ferro Corporation purchased DMC2 and their related Uden facility, and also purchased EMCA-Remex, a producer of metalization materials for passive components.
- Also In 2001, Dover Corporation, through its Novacap subsidiary, purchased Syfer of the UK, a specialty producer of value-added and application specific ceramic capacitors.
- In 2003, there were a series of acquisitions related to the ceramic capacitor industry. KEMET Corporation purchased the ceramic capacitor assets of Sierra/KD Corporation, which increased their presence in value-added and application specific ceramic capacitors.
- This was followed in China by Walsin Technology Corporation’s purchase of Eden Technology Corporation and Pan Overseas, both manufacturers of ceramic capacitors.
- While in Japan, Murata Manufacturing purchased Ogaki ceramics, which expanded Murata’s technology base in low temperature co-fired ceramic technology.
- In 2007 AVX Corporation purchased the publically traded American Technical Ceramics (ATC), which increased AVX’s presence and commanding market position in value-added and application specific ceramic capacitors.
- And in 2012, Exxelia purchased Temex Ceramics from Tekelec in France and expended its value-added and application specific acquisition strategy into the ceramic dielectric realm.
- And finally in 2014, Dover Corporation spun off its ceramic capacitor operations, including Novacap, Dielectric Labs and Syfer Technology into Knowles Corporation.
Plastic Film Supply Chain:
Acquisitions involving the plastic film capacitor supply chain accounted for about 19% of cumulative capacitor asset value in transactions between 1990 and 2014.
- Transactions in the plastic film capacitor supply chain began with Vishay’s 1993 acquisition of the German film capacitor manufacturer, Roederstein.
- This was followed in 1998 by AVX’s purchase of Thomson Passive Components (TPC) which was largely a film capacitor house (both AC and DC).
- And in 1999 Siemens + Matsushita Corporation spun out EPCOS, a major German manufacturer of plastic film capacitors (and many other types of components).
- In 2002 there were two major acquisitions involving plastic film capacitors and these were Vishay’s purchase of BCC, and Maxwell’s purchase of Montena (Power Film).
- In 2005 there was the CDE purchase of York, which expanded CDE’s position in aluminum electrolytic capacitors into the power film capacitor business.
- In 2007, KEMET made two major purchases in the film capacitor space, including the acquisition of Evox-Rifa in Europe and Arcotronics Italia SpA in Europe as well.
- Also, in 2011, Exxelia purchased Dearborn, a manufacturer of value-added and application specific plastic film capacitors located in Florida.
Aluminum Electrolytic Supply Chain:
Acquisitions in the aluminum electrolytic capacitor supply chain are few and far between, representing only 5% of all transactions in the capacitor segment between 1990 and 2014 (one major vendor noted that few transactions in aluminum capacitors actually take place because seldom does anything come up for sale).
- Regardless, transactions of note include Vishay’s purchase of BCC (which included a significant amount of aluminum capacitor revenues) in 2002.
- This was followed by Nichicon’s purchase of Fujtisu Media Devices in 2008 to gain access to a larger market for conductive polymer aluminum capacitors.
- And Murata’s purchase of Showa-Denko Capacitor in 2009, which was also related to the acquisition of conductive polymer aluminum capacitor technology.
- This was followed by CDE's purchase of the Philips Columbia SC aluminum capacitor operations in 2011.
- And KEMET’S purchase of the CDE foil operations in 2011 (which CDE had just previously purchased from Panasonic) located in Knoxville, TN.
Acquisitions in Resistors:
The following describes the acquisitions in the global resistor industry between 1990 and 2014. The reader will note that transactions in resistors are fewer than that in the capacitor space. This is because the relative markets for resistors are much smaller than capacitors on a global basis.
The cumulative resistor asset value that has changed hands over the past 25 years is valued by Paumanok Publications, Inc. at $2,250 million USD, compared to capacitors, which is estimated at $6,105 million USD during the same time period. The reader will also immediately note in Figure 2, that transactions in the resistor market over the past 25 years have been dominated by Vishay, who has made a series of acquisitions to bolster its position in specialty resistor markets worldwide.
Acquisitions In Specialty Fixed Resistors
Specialty fixed resistors include the Wirewound and Nichrome film resistors as well as the SIP and DIP Networks, bulk metal foil and the tin-oxide flameproof resistive products.
- Vishay began its massive buildup strategy through acquisition in the late 1980s with its purchase of both Draloric of Germany, and Dale of the United States, which gave Vishay a commanding market position in wirewound and nichrome metal film resistors.
- Then there was almost a decade with very little M&A activity in the space, followed by a flurry of activity, which included TT Electronics’ purchase of BI Technologies in 2001.
- And this was followed by Vishay’s purchase of Alpha Electronics (Japan) and their metal foil resistor business.
- Then in 2006 Vishay purchased the Phoenix Do Brasil operations to gain greater access to the South American market.
- In 2007 Ohmite purchased the Ultronix wirewound and specialty Angstrohm resistor lines from Vishay.
- In 2010 Vishay spun out their bulk metal foil resistors along with their measurements group in the Vishay Precision Group, a separately traded company.
- This was followed in 2013 by Vishay’s purchase of Huntington Electric in the U.S. and MCG in France.
Acquisitions in Chip Resistors:
In thick film chip resistors, the major acquisitions over the past 25 years are as follows
- Yageo’s purchase of Phycomp (or Philips Electronics thick film chip resistor business), which happened in 2000.
- Followed by Walsin Technology Corp in China and their purchase of Eden Technology Corp’s thick film resistor lines.
Acquisitions in Non-Linear Resistors
Acquisitions in non-linear resistors also played an important role in shaping the modern resistor landscape.
- This included Siemens + Matsushita’s spin-off of EPCOS in 1999, which included their NTC and PTC thermistor product lines, and their metal oxide varistor lines (thermistors and varistors are considered non-linear resistors).
- This was followed in 2000 by Vishay’s purchase of ceramic PTC thermistor manufacturer, Ceramite of the U.S.; and Vishay’s follow up of purchasing BCC components, which also included their lines of PTC and NTC thermistors.
- Also, In 2009, TDK acquired EPCOS, which gave TDK command of the global NTC and PTC thermistor markets and the metal oxide varistor markets.
Acquisitions in Thin Film resistors
Thin film resistor technology has also played an important role in Vishay’s overall passive component strategy.
- In 1988 Vishay purchased the Sfernice operations in France which speailize in thin film nichrome resistors.
- In 2000 Vishay purchased the Electro-Films (EFI) operations which specialized in tantalum nitride thin film resistors.
What Motivates Companies to Buy?
Based on a detailed analysis of each of the acquisitions made in the capacitor and resistor segments over the past 25 years, we have come to the conclusion that the majority of acquisitions (67%) were made because they were an integral part of a grand strategy of the acquirer. The grand strategy included the extension of a product portfolio to be a “one-stop shop” and to appear attractive to distributors; or it involved the dominance of a specific segment of the market, with emphasis upon the value-added and application specific component segment. About 21% of acquisitions, based on the value of assets transferred, were based on the need for the acquirer to gain specific technology that they did not have and could not emulate. This need for technology typically involved high capacitance ceramics, high CV/g tantalum powders, conductive polymer technology, and thin film resistors. The final 12% of acquisitions we consider to be “Opportunity” based, whereby a vendor wanted to exit the market, and an acquirer saw the opportunity to expand and acted on it.
Source: Paumanok Estimates- All Rights Reserved.