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The Whiff at WAF: An Open Letter to the Chairman of the Siltronic AG Supervisory Board

Dr. Tobias Ohler
Chairman of Supervisory Board
Siltronic AG
Hanns-Seidel-Platz 4
81737 Munich


Dear Dr. Ohler,

I am writing to you in your capacity as Chairman of the Supervisory Board of Siltronic as a concerned institutional investor.

Siltronic announced on 29th November that it was in “advanced, near to final discussions on a takeover by GlobalWafers” expecting to lead to “a voluntary tender offer to Siltronic shareholders at an offer price of €125 per share”. The communication also stated that the “offer price represents a premium of 48% above the volume-weighted average XETRA price over the last 90 days”, even though over that period there was no public disclosure of any specific merger talks or market speculation that Siltronic might be actively engaged in industry consolidation.

In fact, the undisturbed share price of Siltronic prior to any public announcement of merger talks with GlobalWafers on 29th November was €112.3, meaning that the premium offered is a very modest 11%. We therefore believe that this claim is misleading to Siltronic shareholders as to the generosity of the control premium on offer and should be withdrawn.

We do not dispute the industrial logic of the combination which we note has led to a $2.5bn (28%) appreciation of the market value of the proposed acquiror Global Wafers since the deal was announced, only the measly €350m (11%) premium offered to Siltronic shareholders, which self-evidently is an inequitable sharing of the potential value creation resulting from any deal between the shareholders of Siltronic and Globalwafers. In fact, for a modest control premium GlobalWafers would seem to have secured almost all of the upside from any deal for its own shareholders.

We are also concerned that Siltronic minority shareholders are being corralled into selling out at a cyclical bottom in the semiconductor wafer industry for a valuation that appears equivalent or below the replacement value of any alternative greenfield industry investment (capital expenditure which unlike the acquisition of SIltronic would not have any compensating immediate positive cashflow).

We also note that the controlling shareholder (51%) of GlobalWafers is Sino-American Silicon products, which we understand is a major customer of Wacker Chemie, the controlling (31%) shareholder of Siltronic. We also understand that the impetus to enter negotiations around a combination would seem to have come from Wacker and that Siltronic “expects that Wacker Chemie AG will sign an irrevocable undertaking agreement and tender its entire Siltronic shares”. We also note that as well as performing the role of Chairman of the Siltronic Supervisory Board representing the interests of all shareholders, you are also the CFO of Wacker Chemie. Consequently, there is potential for a perceived conflict of interest. What assurances can the Supervisory Board of Siltronic provide that no such conflict of interests exist and ensure that any offer is full and fair to all Siltronic shareholders?

Yours sincerely,


Barry Norris
CEO and Fund Manager
Argonaut Capital Partners