Diodes to Acquire BCD Semiconductor - Analyst Blog
January 02 2013 - 4:00AM
Zacks
Diodes
Incorporated (DIOD) recently announced
that it will acquire BCD Semiconductor Manufacturing
Limited (BCDS), an analog chip maker, for $151 million or
$8 per ADR (American depository share).
The decision to acquire BCDS is perceived as the company’s strategy
to expand its power management products range and strengthen its
position in Asia. On the flipside, net income of Diodes has
declined more than 50% in the first nine months of 2012.
Consequently, the acquisition is likely to reduce its liquidity in
the short-term and will continue to drag down its earnings until it
is completely integrated with the company.
BCD Semiconductor possesses an existing line-up of solid standard
Linear and Power Management products and AC to DC solutions for
Switch-Mode Power Supply charger and adaptor. The company has an
extensive development team in China with a very strong local market
position coupled with a cost effective wafer fab capability and
capacity.
The acquisition is likely to provide synergistic benefits to Diodes
by expanding its footprint in the broader Analog market and
extend its product offerings. The recent acquisition is in line
with Diode’s strategy for inorganic growth. At the same time, the
merger will be beneficial for both the companies as it provides
operational synergies with an expanded customer base and cost
saving opportunities.
Diodes designs, manufactures, and supplies application specific
standard products in the discrete, logic, and analog semiconductor
markets primarily in Asia, North America, and Europe. The company
primarily serves the consumer electronics, computing,
communications, industrial, and automotive markets.
Diodes currently has a Zacks #4 Rank, which translates into a
short-term Sell rating. We have a long-term Neutral recommendation
on the stock. One of its competitors, Fairchild
Semiconductor International Inc. (FCS) carries a Zacks #3
Rank, which translates into a short-term Hold rating.
BCD SEMICON-ADR (BCDS): Free Stock Analysis Report
DIODES INC (DIOD): Free Stock Analysis Report
FAIRCHILD SEMI (FCS): Free Stock Analysis Report
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