Austria's AMS fails in its Osram takeover attempt but won't give up

VIENNA (Reuters) - Austria's AMS AMS.SAMS.VI failed in its 4.5 billion euro (£4.01 billion) takeover attempt of Osram OSRn.DE but said it would still explore strategic options to pursue an acquisition of the German lighting group.

The Logo of Austrian sensor specialist AMS is seen on their factory in Unterpremstaetten, Austria October 3, 2019. REUTERS/Leonhard Foeger

The sensor specialist, which wants to create a global leader in sensors and photonics, managed to collect 51.6% of Osram shares, including its own near 20% stake, significantly less than the required 62.5% level, it said on Friday.

AMS, best known for supplying sensors for the latest iPhones but working on reducing its dependence on Apple AAPL.O, had fought a fierce takeover battle for the much bigger leader in automotive lighting with private equity groups.

It upped its initial bid to 41 euros a share days before the acceptance period expired on Tuesday, to defy the entry of a new bidding consortium of Bain Capital and Advent. It also bought as many shares as possible via the market, making it now the largest Osram shareholder with a 19.99% stake.

“The strategic logic and the significant advantages of combining AMS and Osram are unchanged,” AMS Chief Executive Alexander Everke said. “We intend to leverage our position as Osram’s largest shareholder in a dialog with Osram as we continue to pursue the full acquisition of the company.”

Everke has a vision of a combined group that offers package solutions that have AMS sensors tucked in Osram headlights. One of the difficulties for autonomous vehicles is to drive in heavy rain, fog or snow.

Osram, whose lightbulbs were once ubiquitous in European homes, became a takeover target after Chief Executive Olaf Berlien’s strategy of turning it into a high-tech photonics company did not bring the hoped-for success. The German group reported a loss in the third quarter with all of its business units posting double-digit falls in revenue.

Osram said last week that Bain and Advent were prepared to beat the existing AMS offer of 38.50 euros a share. Bain, together with Carlyle Group CG.O, had offered 35.00 euros a share but turned to a new partner after Carlyle refused to add more funds to outbid AMS.

A spokesman for Bain declined to comment on the result of the takeover battle on Friday. The new duo of Bain and Advent is currently inspecting Osram’s books “with a view to submitting an offer,” Osram said in a statement on Friday.

“Following the failure of the recent takeover attempts, we are now retaining our independence and will shape our own future,” Osram CEO Berlien said.

The German group has invited the AMS management to engage in discussions “on a meaningful and mutually beneficial collaboration”, it said.

Analysts had acknowledged the strategic idea of combining AMS expertise in sensors with Osram’s high-tech lights and LEDs, and highlighted complementary product ranges.

The AMS defeat means that it cannot launch a new takeover attempt for 12 months unless Osram and the German regulator agree. It also has to give back the tendered shares.

However, with its nearly 20% stake, AMS could make life difficult for any other interested party.

There has been speculation among analysts and traders that AMS could continue to buy shares in the market after it has obtained the required regulatory clearances. Once AMS holds 30% it has to make an obligatory takeover offer, according to German law.

It is unclear whether UBS UBSG.S, HSBC HSBA.L, and Bank of America Merrill Lynch, which had agreed to provide a 4.4 billion euro bridge financing for the Osram takeover, would support such an approach.

AMS had $1.4 billion (1.28 billion euros) in debt at the end of the second quarter and has already spent more than 600 million euros to buy Osram shares over the market in recent weeks.

Osram said that “irrespective of the talks with AMS,” it would give an update on its strategy on Nov. 12 when it will publish its annual results.

Reporting by Kirsti Knolle; Editing by David Evans and Rosalba O’Brien