Taipei-based electronics distributor WT Microelectronics Co., Ltd. has entered into a definitive agreement to acquire 100 percent of the shares of Future Electronics Inc. for an enterprise value of $3.8 billion in an all-cash transaction. The move comes following the resignation of Future founder and longtime CEO Robert Miller earlier this year amidst allegations of personal misconduct.

WT Micro reported $19 billion in revenue in 2022 and is the fourth largest electronics distributor in the world, according to IBE. Future, which is privately held, does not publicly release earnings but WT Micro reported Future’s revenue at $2.9 billion with operating income of $228 million and net income of $184 million for the six months ended June 30, 2023. The company, based in Montreal, employs 5,200 people across 47 countries.

One analyst, speaking off the record, said the move is beneficial for both companies. WT Micro does not have a physical presence in the U.S. and will gain a significant inroad through Future, which services the Americas largest OEMs. Future, which has grown through greenfielding operations rather than through acquisition, will expand its presence in the Asia-Pacific market. There does not appear to be any supplier conflicts between the two companies so customers of both organizations will benefit from a broader product selection.

It is also likely, given Future’s recent disruption, that suppliers will welcome the new organization.

The strategic transaction is anticipated to deliver long-term, sustainable value to all relevant stakeholders including customers, suppliers, employees and shareholders, WT Micro said in a statement.

The line cards of the two companies are indeed complementary. WT Micro has a number of key semiconductor franchises Future does not carry such as Intel and Analog Devices. Future, which lost a number chip lines when those companies reduced their distribution rosters, carries brands such as Kemet, TE Connectivity, Renesas, Sharp, Qualcomm and others.

“This is transformational for WT Microelectronics and Future Electronics and important for the electronic component ecosystem,” said Eric Cheng, chairman and CEO of WT Microelectronics. “Future Electronics has an experienced and deep management team and a very talented employee base, and is highly complementary to WT Microelectronics in terms of product offerings, customer coverage, and global footprint. Future’s management team, all of their employees worldwide, and all locations and distribution centers will continue to operate and add value to the organization. We are excited to invite Mr. Omar Baig to join WT Microelectronics’ Board of Directors post-closing and look forward to working with him and his immensely talented colleagues around the world to build together a best-in-class electronic components distributor.”

“We are excited to join WT Microelectronics and believe that this transaction will benefit all our stakeholders. Our two companies share a common culture, driven by a rich entrepreneurial spirit that will empower our talented employees globally”, said Omar Baig, president, CEO and chairman of Future Electronics. “This combination is a great opportunity for WT Microelectronics and Future Electronics to jointly form a world-class industry leader, and allows us to continue our long-term strategic plan to offer the highest level of services to our customers, which we have been doing for the past 55 years.”

Future has faced a number of controversial events in its history. The company’s headquarters were raided by the FBI in the late 1990s over its pricing and resales practices. The company was allegedly buying components on behalf of a customer that received a significant supplier discount and then reselling those components to other customers. Due to Canada’s privacy laws the case was never litigated.

Recent allegations against founder and former CEO Robert Miller shocked Future employees and Miller’s former and current colleagues. Miller is an intensely private individual who granted an interview to EPSNews’ Editor-in-Chief Bolaji Ojo in 2014. He is beloved by Future’s employees and is well-known for his altruism.

Earlier this year a Canadian media company released a multi-year investigation alleging Miller’s involvement with underaged girls. Miller immediately resigned from Future and vowed to fight the allegations.

According to WT Micro the merger will provide the following benefits:

Creates a world-class global electronic components distributor: The transaction will enable the combined company to provide seamless cross-border services to customers around the globe, achieve geographic diversification (given WT Microelectronics has no presence in the Americas and EMEA) and deliver a full range of product offerings, application engineering expertise, as well as superior logistics management services.

Provides greater supply chain resilience that benefits suppliers and customers: The transaction will further enhance the combined company’s strengths in supply chain solutions through differentiated and comprehensive product line cards, extended customer coverage, and unmatched market intelligence, which will benefit the entire value chain with greater resilience.

Forges a stronger global team with shared company culture and dual headquarter structure: The transaction brings together two companies that share a common entrepreneurial spirit, long tenure, and commitment to providing superior supply chain services to partners globally. With a dual-headquartered structure in Taipei and Montreal, employees of both companies are expected to benefit from substantial opportunities for growth.

Delivers compelling financial benefits: The transaction is expected to improve WT’s long-term financial performance with diversified businesses across products, more balanced geographic mix, and higher operating margins. The transaction is also expected to be accretive to WT Microelectronics’ EPS from the first full financial year post-closing.

WT Microelectronics intends to fund the transaction with a combination of cash on hand and committed debt financing provided by DBS Bank. The transaction has been unanimously approved by WT Microelectronics’ Board of Directors and Future Electronics’ Board of Directors, and is expected to close in the first half of 2024, subject to customary closing conditions including the receipt of required regulatory approvals.

Citigroup is serving as the exclusive financial advisor to WT Microelectronics, with Skadden, Arps, Slate, Meagher & Flom LLP, Osler, Hoskin & Harcourt LLP, and Tsar & Tsai Law Firm as its legal advisors. Canaccord Genuity Corp. is serving as the exclusive financial advisor to Future Electronics with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. as its legal advisor.

WT Micro was founded in 1993 and partners with over 80 suppliers across every major technology segment to serve a highly diversified customer base of over 10,000 customers worldwide. Founded in 1968, Future Electronics believes its 5,200 employees are its greatest asset, with 170 offices in 47 countries. Future Electronics is globally integrated, with a unified IT infrastructure that delivers real-time inventory availability and access to customers.

This article is an extract from the future electronics at https://www.futureelectronics.com/blog/news/wt-microelectronics-to-acquire-future-electronics/

WT Microelectronics to Acquire Future for $3.8 Billion