InvenSense Inc (NYSE: INVN) and TDK announced they have entered into a definitive agreement wherein TDK agrees to acquire all of the outstanding InvenSense shares for cash at an acquisition price of USD 13.00 per InvenSense share, for a total acquisition price of USD 1.3 billion. The transaction has been unanimously approved by the Boards of Directors of both companies. Completion of the transaction is expected in second quarter of the fiscal year ending March 31, 2018, and is subject to approvals by InvenSense shareholders and the relevant regulatory authorities. The acquisition will be completed through a merger of a newly created subsidiary of TDK with and into InvenSense, with InvenSense continuing following the merger as a wholly-owned subsidiary of TDK.
TDK’s current medium-term (3-year) management plan ending in March 2018 focuses on the importance of three areas: a) automotive, b) manufacturing devices and energy, and c) Information and Communications Technology (ICT). As part of its strategy for growth in these key areas, TDK has identified sensors and actuators, energy units and next-generation electronic components as three product areas for strategic growth aimed at unlocking new business opportunities in the fields of Internet of Things (IoT). Sensors are viewed as an important IoT-enabling technology and TDK envisions greatly expanding this portion of its business and providing a broad range of sensor solutions to its customers. TDK currently sells magnetic sensors that employ thin-film magnetic technology, which TDK has accumulated through its endeavors with hard disk drive (HDD) solutions over many years. Further, TDK’s product line includes pressure, temperature, electric current, and various other sensor types, and TDK plans to expand its sensor business going forward.
Through the acquisition of InvenSense, TDK will be able to strengthen its product line-ups and technologies, which is expected to enable the combined company to become a stronger player in broad based sensor solutions for IoT, automotive and ICT by accelerating the sensor product roadmap to offer innovative next generation products and platforms. In addition, sensor fusion, the combination of various sensor technologies and software creates products with enhanced value solutions for customers across multiple fields.
InvenSense is a world forerunner in motion sensor solutions, known mostly for its flagship six-axis and nine-axis motion sensors, which are used in some of the world’s most advanced consumer products and applications. In recent years its portfolio has expanded with additional solutions for inertial, environmental, microphone, and ultrasonic sensors. InvenSense’s “fabless” manufacturing model enables development of high-performance and cost effective products via its unique CMOS-MEMS production process. Enhanced by its value-added software solutions, InvenSense has expanded rapidly to become a worldwide strong player in sensors for consumer devices including smartphones, drones, wearables, gaming, inertial navigation, and both optical and electronic image stabilization for cameras. Looking ahead, growth avenues beyond mobile include large addressable opportunities in the fields of IoT, automotive, and industrial, driven by increasing consumer demand of indoor navigation, Virtual Reality (VR), Augmented Reality (AR), and Advanced Driver Assistance Systems (ADAS).
The acquisition will enable TDK to combine InvenSense’s advanced suite of sensor and software platforms with its wide-ranging portfolio of magnetic, pressure, temperature, and microphone sensors. In addition, sensor fusion, combining various types of technologies and product line-up, creates products with high added value. Sensor fusion combines multiple sensors and software solutions that enables TDK to expand its business in the three key areas and further strengthening of its position as a global player in the sensor business, which is one of TDK’s strategic growth products.
In January 2016, TDK established a joint venture with Qualcomm Incorporated, called RF360 Holdings Singapore PTE, Ltd., and has also entered into agreements to expand technical cooperation in a wide range of fields including passive components, batteries, wireless power transfer, sensors, MEMS and various other next-generation technologies for mobile communications, IoT, and automotive. This joint venture presents an exciting opportunity for InvenSense to expand its customer base in ICT (Information and Communications Technology), IoT and automotive areas while enabling InvenSense to provide sensor solutions with increased synergies.
As the fields of ICT, automotive and industrial experiences growing demand for sensors, TDK, together with InvenSense, expect to provide unique products and sensor expertise across sales channels and a global customer base that TDK and InvenSense have each cultivated over several years. TDK and InvenSense are resolved to exhibit the same level of commitment to providing customers with quality, expert solutions and customer service as a combined company.
TDK’s President and CEO, Mr. Shigenao Ishiguro, made the following statement regarding the acquisition:
“TDK’s sensor business, one of its strategic growth areas, can be strengthened by merging TDK’s portfolio of magnetic sensor technologies (where its strength lies) and its wide range of sensor products with InvenSense’s expanding sensor technology. This acquisition is a fundamental element in TDK’s strategy to provide unique and high-value-added products and services in IoT. We aim to become a strong player in the sensor business with InvenSense as our perfect partner.”
InvenSense’s President and CEO Behrooz Abdi made the following comment:
“This is an exciting day for InvenSense as our proposed acquisition by TDK represents what we view as a compelling win for InvenSense’s shareholders, customers and employees. TDK understands the value of InvenSense’s suite of sensor and software platforms. This merger is the culmination of years of innovation and execution by our world-class employees. Together with TDK, we see a bright future that leverages our commitment to innovation with TDK’s scale, significant partner relationships and distribution channel. Our strategic goals are aligned, and we are confident that together with TDK we will accelerate our roadmap to provide next-generation sensor technologies in key fields for the world’s most innovative companies.”
In connection with the acquisition, BofA Merrill Lynch is acting as TDK’s exclusive financial advisor and Jones Day is acting as legal counsel to TDK. Qatalyst Partners is acting as exclusive financial advisor and Pillsbury Winthrop Shaw Pittman LLP is acting as legal counsel to InvenSense. (Original Source)
Shares of InvenSense shares are trading at $12.69, up $1.85 or +17.07%. INVN has a 1-year high of $11.23 and a 1-year low of $5.42. The stock’s 50-day moving average is $8.42 and its 200-day moving average is $7.33.
On the ratings front, InvenSense has been the subject of a number of recent research reports. In a report issued on December 13, Summit Redstone analyst Jagadish Iyer reiterated a Buy rating on INVN, with a price target of $12, which represents a potential upside of 11% from where the stock is currently trading. Separately, on November 16, Pacific Crest’s John Vinh reiterated a Buy rating on the stock and has a price target of $9.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jagadish Iyer and John Vinh have a yearly average return of 23.8% and 9.6% respectively. Iyer has a success rate of 65% and is ranked #180 out of 4291 analysts, while Vinh has a success rate of 60% and is ranked #400.
Overall, 2 research analysts have assigned a Hold rating and 3 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $10.00 which is -7.7% under where the stock closed yesterday.
InvenSense, Inc. designs, develops, markets and sells micro-electro-mechanical system gyroscopes for motion tracking devices in consumer electronics. It targets applications in smart phones, tablet devices, console and portable video gaming devices, digital still and video cameras, smart TVs, 3D mice, wearable health and fitness monitors and portable navigation devices.