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Delta Electronics plans Eltek buyout

Posted: 19 Dec 2014 ?? ?Print Version ?Bookmark and Share

Keywords:power supply? telecom? datacom? M&A?

Delta Electronics is set to acquire Eltek, a move that will consolidate the former's position as the market leader in the merchant power supply market.

The combined revenues of the two manufacturers accounted for a fifth of the global market revenues in 2013, more than the combined market share of the second and third largest suppliers, Artesyn Technologies and Lite-On.

The acquisition will help Delta Electronics secure its position, especially in the high-end telecom/datacom markets where Eltek has focused its power supply products. Although growing modestly, the telecom/datacom sector is the largest segment of the market, accounting for a quarter of the total market in 2013 and this is projected to remain unchanged over the next five years.

With this acquisition, Delta Electronics will account for 28 per cent of this market segment based on 2013 revenues, strengthening its position. This will be particularly important in the coming years as the industry faces competition from Chinese telecom manufacturers such as Huawei and ZTE making market share gains.

This is the second instance of major M&A activity in the power supply market this year. In April, Bel Fuse acquired the power supply business of Power-One from ABB. This strengthened Bel Fuse's position in the DC-DC converter market where it went from being ranked the 15th largest supplier to the 6th. As industry growth remains limited and with increasing competition from lower cost supplier, IHS expects that it is likely that there will be more acquisitions in 2015.

Delta Electronics announced on Dec. 15 that its 100 per cent owned subsidiary Deltronics (Netherlands) B.V. will acquire Eltek ASA through public offering at NOK 11.75 ($1.59) per share for up to 100% of all outstanding Eltek shares with estimated value of NOK3.9 billion ($530 million). The transaction is expected to complete by June 2015.

- Jonathon Eykyn

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