"Light generation plus optical sensors - that's the future," says Alexander Everke. "With the combination of ams and Osram, we can therefore develop completely new products and open up new markets". The fact that light generation and optical sensor technology go well together is not so new. "But we are the first to implement this good idea. This gives us a decisive advantage in terms of time".
The takeover should therefore be completed quickly. That's why ams has lowered the minimum acceptance threshold for the Osram bid from 70 percent to 62.5 percent. "We are very optimistic that we will be able to skip it to the Annual General Meeting by the end of October," said Everke. That is why there is no Plan B.
This is how he sees the timing: The threshold must be crossed by the beginning of October; at the end of October 2019, the Annual General Meeting gives the go-ahead and approves a capital increase of EUR 1.5 billion to be used for the takeover. The closing could then be completed in the first half of 2020. As the companies are complementary, difficulties due to antitrust regulations are not to be expected. On a voluntary basis, a CFIUS procedure will also be carried out in the USA; here, too, no difficulties are to be expected.
Osram and ams would then have the opportunity to build a European champion, a highly profitable large company that could target new markets with new products that each of the two could not develop individually. "Finally, we can not only maintain a high-tech sector in this country, but expand it and become a leading player in this market.
According to Everke, ams has been able to gather a lot of experience over the past few years on how this works. The company has made numerous takeovers, always following the same pattern: purchasing complementary technologies and IP that ams had not previously had in-house, but which fit well with sensor technology and lead to new, differentiated products that yield a high margin. This would also be good for Osram, because "the long-standing spiral of transformation and restructuring can be broken and the focus can finally be placed on growth".
This has worked outstandingly at ams so far: In the mobile communications market, which has shrunk by around 4 percent and in the likewise declining automotive market, ams has been able to grow over the last three years - not simply by a few percent, but by no less than an average of 48 percent per year. "Why? Because we developed products that didn't even exist four years ago and nobody had thought of," says Everke. "We therefore expect continued strong growth this year as well.
The takeover of Osram is now to follow this pattern. COO Dr. Thomas Stockmeier listed only a few areas in which significant synergy effects can be expected, from micro LED displays to lidar, sensors for vital parameters, sensors for skin moisture and fat content to miniature cameras and 3D face detection. Everywhere, the combination of light generation and sensor technology will open up new growth markets.
At the roadshow that ams held over the past two weeks, this convinced investors - both existing and new ones. And finally, Osram's Supervisory Board has given its approval to the takeover by ams. That's why Everke is so sure that he can complete the purchase of Osram quickly.
And that is why there are no jobs available, as feared by the trade unions because of the destruction of Osram. On the contrary, new engineers would be hired. However, the Digital Lighting unit of Osram, which generates a quarter of Osram's sales, will not be taken over because it does not fit into the light generation and sensor technology portfolio. This unit would be sold by ams to a strategic investor, interested parties had already contacted ams, but talks could not take place at this time. He attaches great importance to the fact that a new owner of the Digital Lighting division will continue to invest, "this company would then also be an interesting customer for us," says Everke.
The financing of the takeover of Osram was also not a problem. "We have a strong cash flow, the competitor for the Osram takeover from the private equity sector does not have that, it only has the cash flow from Osram alone. He explains: "We had a net debt to EBITDA of 5 and can reduce it to below 2 within twelve months by the end of 2019. From the closing after the takeover of Osram, we would have a debt-equity ratio of around 4x net debt. After just two years, we can then push it back to a factor of 2, so two years after the closing, we would already be back where we arrived at the end of 2019 as ams alone. This shows that we are in a position to carry out the project." The interest burden would be less than 4 percent, much lower than for a private equity company. On the repeated suspicion that a Chinese investor is behind the takeover, he explained quite clearly: "There is no Chinese company involved.
On the other hand, there are 300 million euros in synergy effects per year that ams and external consultants have identified. 60 million per year would result from the fact that the sales organizations of both companies are complementary. Together, they could therefore generate more sales. 120 million euros would result from the existing production facilities. Both had invested heavily over the past few years, and together they could now make better use of the capacity of the plants.
ams also expects a synergy effect of 120 million euros per year in R&D and administration. Several hundred jobs would be cut here.
A contradiction to the allegedly planned expansion of jobs? No," Everke replies, "ams will continue to increase the number of engineers after the takeover. The R&D sector of Digital Lighting is expected to be sold as well, so that the overlap in the R&D sector would be less than 5 percent.
But that is exactly what IG Metall fears: That jobs will be cut after all. This is why the union wants to prevent a takeover of Osram by ams. The concept of the investors Bain Capital and the Carlye Group convinces them more, who do not want to dismantle Osram and whose promises to preserve jobs they apparently believe more. For Osram's supervisory board, the higher price of 38.50 euros, which ams wants to pay in comparison to Bain and Carlyle, was the decisive factor in the decision to approve, rather than the concept of ams as a whole. Everke is confident, however, that he will also be able to convince the skeptics through constant dialogue.
The CEO of Osram, Olaf Berlien, has now also shown himself not to be convinced by the concept of ams. But even that doesn't really make Everke feel offended: "A little theatrical thunder is part of such an acquisition.