Infineon could be first DAX buyout target

Listed German semiconductor manufacturer Infineon has seen its shares rise by more than 40% in the past six months to €12.39, valuing the company at more than €9bn. The shares have been buoyed by news that the company has been targeted by buyout groups following consolidation in the sector.

Infineon itself has been approached by some of the world’s largest buyout groups to discuss a potential public-to-private of the firm, according to reports, which claim that buyout groups mulling a takeover include Silver Lake Partners, Permira, CVC Capital Partners and Kohlberg Kravis Roberts (KKR).

Silver Lake and KKR have been the usual suspects for acquiring semiconductor businesses since their joint takeover with AlpInvest Partners of an 80.1% stake in Philips’ semiconductors business (later renamed NXP) in August 2006.

Takeover speculation comes naturally in the wake of Infineon’s announced disposal programme. In November 2005, Infineon announced a strategic realignment to “carve out” its memory products business and focus on the logic business, which comprised the automotive, industrial electronics and multimarket (AIM) and the communications business groups

Now, observers believe that the 2006 initial public offering of Infineon’s memory products subsidiary Qimonda was a ruse to discourage hostile takeover approaches. Although this flushed cash into Infineon’s coffers, its remaining 86% stake in Qimonda might entice offers: Infineon’s lock-up period ends in this month.