TDK to Acquire Hutchinson For $126 Million to $140 Million

TDK Corporation and Hutchinson Technology Incorporated have entered into a definitive merger agreement under which TDK will acquire all of the outstanding shares of common stock of Hutchinson for base consideration of $3.62 per share, plus additional consideration of up to $0.38 per share, depending on the level of cash (subject to certain adjustments) less any outstanding borrowings on Hutchinson’s revolving line of credit (net cash) held by Hutchinson as of the last day of the fiscal month immediately preceding the closing date.

The amount of additional consideration, if any, will equal approximately $0.01 per share for each $500,000 of Hutchinson’s net cash over $17.5 million as of the measurement date. As of September 27, 2015, Hutchinson’s net cash position was approximately $40 million. In addition to the satisfaction of Hutchinson’s outstanding debt, the merger values Hutchinson’s equity at approximately $126 million to $140 million on a fully diluted basis.

Takehiro Kamigama, president and CEO, TDK said: “TDK and Hutchinson Technology have shared a long history in the disk drive industry, and I am very pleased that we can announce this agreement. Hutchinson’s expertise and capabilities in design, development, and manufacturing of high precision components and assemblies will be a great addition to the TDK organization.”

Rick Penn, president and CEO, Hutchinson, said: “This transaction represents a compelling opportunity for Hutchinson Technology shareholders, employees, customers and suppliers. By combining the market position, resources and scale of TDK with our precision component manufacturing capabilities, we can ensure that our customers have access to the advanced technology they need. We are pleased to become part of TDK, a premier company in the electronics industry.”

The transaction, which has been unanimously approved by each company’s board of directors, is currently expected to close in the first calendar quarter of 2016, subject to Hutchinson shareholders’ approval, regulatory approvals and other customary closing conditions. Hutchinson’s board of directors recommends that shareholders vote to approve the transaction.

For this transaction, Jane Capital Partners is acting as financial advisor to TDK and Nixon Peabody LLP is acting as TDK’s legal counsel. BofA Merrill Lynch is acting as financial advisor to Hutchinson and Faegre Baker Daniels LLP is acting as Hutchinson’s legal counsel.