The semiconductor industry seems to be moving in the opposite direction: the only safety that CEOs can see is where there are fewer similar companies in the field. Where animals exist under the ‘kill or be killed’ rule, semi companies are migrating towards ‘buy or be bought’ – safety in low numbers.
Companies generally approach acquisition on two fronts. In some cases, acquiring complementary technologies can improve a company’s market position significantly. NXP made a case for this during its acquisition of Freescale, with both companies focused on automotive and security, but little technology overlap.
A similar profile was seen in the 1990s, when the EDA industry’s ‘usual suspects’ snapped up anyone with an idea for boosting design productivity – seemingly, even if that idea was still on the back of the proverbial envelope.
The other front is buying market share. It’s something that’s been seen in the distribution world over the last decade or so, with the ‘usual suspects’ in that sector picking up companies on a regular basis.
But some of the acquisitions during the current round of ‘merger mania’ appear to have been done simply on the basis of not missing out, rather than for any strategic reason.
- A couple of weeks ago, I noted in a blog that we might have seen the last of ‘merger mania’ for 2015. As usual, I appear to have spoken too soon. The latest bidding war is centred on Atmel, which in September, accepted a $4.6billion offer to be acquired by Dialog Semiconductor, equating to $8.80 per Atmel share. Microchip has, apparently, appeared as a ‘mystery bidder’ – offering $9 per share.