ams new offer Osram

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART) IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

· Combination of ams and OSRAM to create a global leader in sensor solutions and photonics with tangible benefits for customers

· Step change for both companies, leveraging European sensor and photonics technology to drive growth, margin improvement and continued investment

· As the largest shareholder in OSRAM with a direct shareholding of 19.99%, ams is confident in succeeding with its highly attractive and fully valued offer – the best option for OSRAM shareholders

· Reflecting on its position as the pre-eminent shareholder, ams has lowered the minimum acceptance threshold to 55%

· EUR 41.00 offer price reflects a premium of 42% to the undisturbed share price of OSRAM as of 2 July 2019 (EUR 28.92)

· Constructive discussions with OSRAM based on Cooperation Agreement with stakeholder commitments and protective covenants for OSRAM employees and manufacturing sites in Germany

· Cost and revenue synergies with an expected annual pre-tax run-rate in excess of EUR 300 million, representing significant value creation

· EUR 4.4bn committed bridge facility and EUR 1.6bn underwritten equity issuance, resulting in pro-forma Dec-2019 net debt/EBITDA ratio of 4.5x or 3.4x adjusted for run-rate synergies

Premstaetten, Austria (18 October 2019) -- ams (SIX: AMS), a leading worldwide supplier of high performance sensor solutions, announces that it intends to launch a new all-cash takeover offer for OSRAM Licht AG ("OSRAM") for 100% of the share capital of OSRAM at a price of EUR 41.00 per share ("Offer"). The Offer which represents a premium of 42% to the undisturbed OSRAM share price of EUR 28.92 as of 2 July 2019 will be launched by ams Offer GmbH, a newly incorporated, wholly owned subsidiary of ams. ams is the largest shareholder in OSRAM with a direct shareholding of 19.99% which ams will not exceed outside of the Offer. As a result of ams' shareholder position, ams has lowered the minimum acceptance threshold to 55%.

Winning way forward for ams and OSRAM

The combination of ams and OSRAM allows ams to create a global leader in sensor solutions and photonics with approximately EUR 5 billion of revenue. This accelerates ams to win in new breakthrough optical solutions, expedites the diversification of ams' revenue mix, enhances its manufacturing footprint with clear scale and cost advantages, and leverages the complementary go-to-market strengths of both companies. This combination is a winning way forward for OSRAM, its employees and shareholders as it creates a compelling technology platform and a stronger combined company. Designed to enable profitable growth, the combination will accelerate time-to-market for new solutions and increase content opportunities across end markets. In addition, the Offer is also consistent with the criteria ams has publicly stated for large transactions, i.e. it is strategically compelling, demonstrably value enhancing, financially accretive, achievable with a sustainable capital structure, and fits with ams' financial model.

"We are pleased to announce the launch of the new takeover offer to acquire OSRAM, delivering on our stated intention," said Alexander Everke, CEO of ams. "We are convinced that our Offer will be successful as it provides a highly attractive, fully valued price at a straightforward acceptance threshold. As the pre-eminent OSRAM shareholder at 19.99%, we are furthermore convinced that this Offer is the best available option for OSRAM’s shareholders. The strategic rationale of creating a global leader in sensor solutions and photonics, with strong European roots, is unchanged and offers a compelling opportunity for OSRAM, ams and our shareholders.

We are in constructive discussions with OSRAM to update the existing Cooperation Agreement, clearly underpinning our commitments to employees and manufacturing locations in Germany. We appreciate the fruitful discussions with the Management and Supervisory Board of OSRAM and look forward to working alongside the present OSRAM Management Board to realize our strategic vision."

Comprehensive stakeholder commitments

ams and OSRAM seek to update the existing Cooperation Agreement, building upon the binding, comprehensive commitments aimed at safeguarding OSRAM employees and manufacturing sites in Germany. ams re-affirms all existing commitments entered into on 21 August 2019, including that ams will continue to operate OSRAM’s existing German production sites for a minimum period of 3 years (Standortsicherung), create jobs in manufacturing and engineering in Germany, designate Munich to serve as a co-headquarter of the combined group with a strong presence for global corporate functions, continue existing shop agreements (Betriebsvereinbarungen), collective bargaining agreements (Tarifverträge) and similar agreements in Germany, and ensure existing OSRAM pension plans will remain unchanged. At the same time, ams' concept for the successful integration of both companies encompasses OSRAM and its stakeholders, including unions and employee representatives.

Financially attractive transaction

The Offer results in significant value creation from cost and revenue synergies with an expected annual pre-tax run-rate in excess of EUR 240 million and EUR 60 million, respectively. The expected COGS synergies of more than EUR 120 million, primarily relate to the streamlining and optimization of the combined global manufacturing footprint. The expected operating expense synergies of more than EUR 120 million, primarily relate to the alignment of corporate functions, IT and R&D programs. The expected revenue synergies resulting in a pre-tax value of more than EUR 60 million are driven by leveraging joint go-to-market opportunities. ams expects the majority of these synergies to be delivered within the first 24 months post completion independent of ams’ final ownership level. In order to realize these synergies, ams expects to incur one-off integration costs of approx. EUR 400 million. In the longer term, ams anticipates significant additional revenue synergies from accelerating roadmaps in new optical solution and photonic areas.

The Offer values OSRAM at an enterprise value of EUR 4.6 billion, equivalent to 8.1x Sep-2019 adjusted EBITDA after run-rate cost and revenue synergies (EUR 565 million), and 17.3x Sep-2019 adjusted EBITDA based on consensus estimates (EUR 265 million). The Offer is expected to be accretive to ams' earnings per share from the first year post completion adjusted for cost synergies. The returns from the transaction including cost synergies are expected to exceed the weighted average cost of capital of ams from the second year post completion.

Sustainable financing structure

The financing of the Offer has been secured through a EUR 4.4 billion bridge facility fully underwritten by HSBC, UBS and BAML which will be refinanced through a combination of equity and debt issuances. ams intends to raise EUR 1.6 billion (issue currency CHF) of new equity, which is fully underwritten by HSBC and UBS, primarily in the form of a rights issue and other equity-linked instruments. Pro-forma for the EUR 1.6 billion equity issuance, ams expects that the transaction will result in a pro-forma Dec-2019 leverage of approximately 4.5x net debt/EBITDA or approximately 3.4x net debt/EBITDA adjusted for run-rate cost and revenue synergies. ams expects to de-leverage quickly based on the expected strong cash flow profile of the combined group.

Timeline

Subject to approval by BaFin, ams intends to commence the four week offer period for the Offer by the end of October. The Offer will be subject to customary closing conditions, including regulatory clearances. ams expects to complete the transaction in the first half of next year.

Advisers

UBS is acting as lead financial adviser, together with HSBC in conjunction with the Transaction. Bank of America Merrill Lynch is acting as financial adviser to the Supervisory Board of ams. Linklaters, Schellenberg Wittmer and Herbst Kinsky are acting as legal advisers to ams. Brunswick is acting as communication adviser to ams. PwC provided financial due diligence as well as accounting and tax advice to ams.

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About ams

ams is a global leader in the design and manufacture of advanced sensor solutions. Our mission is to shape the world with sensor solutions by providing a seamless interface between humans and technology.

ams’ high-performance sensor solutions drive applications requiring small form factor, low power, highest sensitivity and multi-sensor integration. Products include sensor solutions, sensor ICs, interfaces and related software for consumer, communications, industrial, medical, and automotive markets.

With headquarters in Austria, ams employs about 9,000 people globally and serves more than 8,000 customers worldwide. ams is listed on the SIX Swiss stock exchange (ticker symbol: AMS). More information about ams can be found at https://ams.com

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Important notice:

This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares in OSRAM (“OSRAM Shares”). The terms and further provisions regarding the Offer by ams Offer GmbH (currently still operating under Blitz F19-566 GmbH), a wholly-owned subsidiary of ams, to the shareholders of OSRAM will be set forth in the offer document which will be published following approval of its publication by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht). Holders of OSRAM Shares are strongly recommended to read the offer document and to seek independent advice, where appropriate, in relation to the matters therein. Moreover, this announcement is neither an offer to sell nor a solicitation of an offer to purchase shares in ams.

The release, publication or distribution of this announcement in certain jurisdictions other than the Federal Republic of Germany and Switzerland may be restricted by law. Persons who are resident in, or are subject to, other jurisdictions should inform themselves of, and observe, any applicable requirements.

The Offer will be made in the United States of America in reliance on, and compliance with, Section 14(e) of the US Securities Exchange Act of 1934 and Regulation 14E thereunder, as exempted thereunder by Rule 14d-1(d).

To the extent permissible under applicable law or regulation, and in accordance with German market practice, ams Offer GmbH (currently still operating under Blitz F19-566 GmbH), its affiliates and/or brokers acting on their behalf may, outside of the United States of America and in compliance with applicable law, from time to time make certain purchases of, or arrangements to purchase, directly or indirectly, OSRAM Shares or any securities that are immediately convertible into, exchangeable for, or exercisable for, OSRAM Shares, other than pursuant to the Offer, before, during or after the period in which the Offer will remain open for acceptance. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases would be disclosed as required by law or regulation in Germany or other relevant jurisdictions.

The shares of ams have not been and will not be registered under the U.S. Securities Act of 1933 (the "Securities Act") and may not be offered or sold within the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There will be no public offering of shares in the United States.

This announcement may contain statements about ams and/or its subsidiaries (together the “ams Group”) or OSRAM and/or its subsidiaries (together the “OSRAM Group”) that are or may be “forward-looking statements”. Forward-looking statements include, without limitation, statements that typically contain words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “believe”, “hope”, “aims”, “continue”, “will”, “may”, “should”, “would”, “could”, or other words of similar meaning. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. ams cautions you that forward-looking statements are not guarantees of the occurrence of such future events or of future performance and that in particular the actual results of operations, financial condition and liquidity, the development of the industry in which ams Group and OSRAM Group operate and the outcome or impact of the acquisition and related matters on ams Group and/or OSRAM Group may differ materially from those made in or suggested by the forward-looking statements contained in this announcement. Any forward-looking statements speak only as at the date of this announcement. Except as required by applicable law, ams does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.

ams is a registered trademark of ams AG. In addition many of our products and services are registered or filed trademarks of ams Group. All other company or product names mentioned herein may be trademarks or registered trademarks of their respective owners. Information provided in this press release is accurate at time of publication and is subject to change without advance notice.