Wise Road agrees $1.4b take-private of Korea chipmaker

The US-listed company’s board has approved the offer of $29 per share in cash – which represents a 54% premium to the March 2 close, the last trading day before reports of an acquisition began to circulate – and recommends shareholders do the same. The transaction is fully backed by equity commitments and not contingent on any financing conditions.

Y.J. Kim, CEO of Magnachip, said in a statement that Wise Road is an ideal partner for the company as it pursues a new overseas growth strategy. Existing management and employees are expected to continue in their roles and Magnachip will retain its principal operations in Korea.

Founded in 2016, Wise Road describes itself as an international Asian PE growth capital investor that often backs companies that have a China expansion angle. The firm’s LPs are strategic players and financial institutions from Greater China, according to a source familiar with the situation.

Wise Road has previously collaborated with state-owned Jianguang Asset Management (JAC Capital) on several occasions, including a carve-out of the standard products unit of US-listed Dutch chipmaker NXP Semiconductors and the establishment of a China-focused joint venture with Qualcomm. Brighten Li is the founder of Wise Road and chairman of JAC’s investment committee.

Last year, the firm teamed up with Asia-IO Capital to acquire a majority stake in a semiconductor packaging materials business from Hong Kong-listed ASM Pacific Technology. It also bought the bulk of the assets of UTAC Holdings, a Singapore-headquartered semiconductor assembly and test services provider, from Affinity Equity Partners and TPG Capital.

Magnachip was established in 2004 through a private equity-backed spinout of Hynix Semiconductor’s non-memory chip unit. It specializes in analog and mixed-signal semiconductor solutions. Last year, the company made a strategic shift into standard products – producing integrated circuits for use in OLED flat panel displays and in power management systems.

This resulted in the divestment of its foundry services group, which produces integrated circuits for fabless and integrated device manufacturers. The asset was sold to two Korean private equity firms, Alchemist Capital Partners Korea and Credian Partners, with support from SK Hynix, among others.

Revenue – excluding the foundry services group – came to $507 million in 2020, down from $520.7 million a year earlier. Over the same period, adjusted EBITDA rose from $40.9 million to $52.9 million, while the company swung from a loss of $21.8 million to a net profit of $344.9 million.

Magnachip derived 61.9% of its revenue from Greater China, 23.1% from Korea, and 10.8% from Vietnam. This reflects where the billing took place, not the geographic origin of the customer. Samsung’s display manufacturing division accounted for 87.5% of revenue generated by the OLED display business and 56.2% of overall standard products revenue.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Industrials
• Technology
• North Asia
• South Korea
• China
• semiconductor
• manufacturing
• Wise Road Capital