Yageo Corporation (TSEC:2327) entered into a definitive agreement to acquire KEMET Corporation (NYSE:KEM) for $1.6 billion on November 11, 2019. Under the transaction, Yageo Corporation will acquire the shares of KEMET Corporation at $27.2 per share in cash. All the outstanding restricted stock units will also receive a consideration of $27.2 per unit. The option holders will receive the amount by which the consideration is in excess of the respective option exercise price. Yageo Corporation intends to fund the transaction with a combination of cash on hand and committed financing of up to $1.3 billion in the aggregate, consisting of (a) a senior secured bridge loan facility in an aggregate principal amount of up to $1.1 billion provided by Citigroup Global Markets Asia Limited, Citibank Taiwan Limited and Citibank, N.A., Taipei Branch and (b) a subordinated shareholder loan facility of $195 million provided by Chen Tie-Min, Chairman and Chief Executive Officer, and a significant shareholder, of Yageo Corporation. Yageo Corporation has also obtained a standby letter of credit issued by Citibank, N.A., Hong Kong Branch, in the amount of $195 million which is available to Yageo Corporation if Yageo Corporation does not receive the cash proceeds of the shareholder loan prior to closing. Yageo Corporation is also in the process of obtaining a syndicated loan of approximately $1.5 billion to finance the acquisition. As of June 3, 2020, Yageo obtained a 5-year syndicated loan of $1.6 billion, and it shall be used to fund the acquisition. Following close of the transaction, KEMET Corporation will become a wholly owned subsidiary of Yageo Corporation and KEMET Corporation's common stock will no longer be listed on any public market. Following the close of the transaction, Yageo intends to keep the KEMET name as a subsidiary of Yageo and continue to market our products under the brand name of KEMET. In case of termination, under certain specific conditions, in case of breach by KEMET, KEMET is required to pay Yageo a termination fee of $63.8 million. Upon termination of the agreement when there has been a failure to obtain CFIUS approval, Yageo will pay the KEMET a cash termination fee of $65.4 million. If Yageo fails to obtain approval by Yageo stockholders, if such approval is required by applicable law, Yageo will pay the KEMET a cash termination fee of $49.1 million. If Yageo fails to consummate the closing upon the satisfaction of all conditions to closing as a result of the failure of the debt financing to be funded, the Company may, within 30 days of termination, elect to receive a cash termination fee of $63.8 million.
 
KEMET leadership team will continue to run the business. Following the close of the transaction, KEMET will remain based in Fort Lauderdale, with a continued corporate presence in existing locations, and the combined company will be headquartered in New Taipei City, Taiwan. The transaction is subject to customary closing conditions and the receipt of required regulatory approvals. The transaction is subject to approval by the KEMET Corporation stockholders, obtaining antitrust and other regulatory approvals in the United States and certain other jurisdictions (including, among others, China, Mexico and Taiwan), receipt of approval from the Committee on Foreign Investment in the United States (“CFIUS”), obtaining foreign investment approval by the Investment Commission, Anti-Monopoly Law of China, Ministry of Economic Affairs, Taiwan, the approval of Yageo's stockholders, if required. The transaction is not subject to a financing contingency. The transaction has been approved by the Boards of Directors of both Yageo Corporation and KEMET Corporation. As of December 26, 2019, KEMET Corporation issued notice to its shareholders for special general meeting. The special meeting of KEMET shareholders to approve the transaction will held on February 20, 2020. On February 4, 2020, the transaction received expiration of the waiting period under the HSR Act, Austrian Cartel Act and received approval of German Federal Cartel Office. As of February 20, 2020, KEMET Corporation stockholders approved the transaction. On March 5, 2020, the Mexican Competition Authority authorized the transaction. On March 9, 2020, CFIUS notified that it will continue its evaluation of the transaction with a 45-day investigation period which will be completed no later than April 23, 2020. As of April 15, 2020, the Taiwan Fair Trade Commission (TFTC) announced its approval for the acquisition. As of April 23, 2020, Committee on Foreign Investment in the United States (CFIUS) has approved the transaction. As of April 29, 2020, the transaction received unconditional approval from the Anti-Monopoly Bureau of the State Administration for Market Regulation in China (SAMR). As of June 9, 2020, Investment Commission, Ministry of Economic Affairs in Taiwan approved the transaction. The transaction is expected to close in the second half of 2020. On February 21, 2020, it was announced that transaction is expected to be closed in third quarter of 2020. As per the update dated May 14, 2020, the transaction is expected to be completed in summer of 2020. As of May 28, 2020, the acquisition is expected to close in the second half of 2020. As of June 9, 2020, the parties expect to consummate the merger on or about June 15, 2020. The transaction will generate greater value for the shareholders of both Yageo Corporation and KEMET Corporation.

Christina Mohr, Laura Sy Chen, Colin Banfield and Aaron Pine of Citigroup Global Markets Taiwan Limited acted as financial advisor and Michael T. Holick, Justin Lungstrum, Jeannine McSweeney, Jonathan Goldstein, Peter Guryan, Abram Ellis, Richard Jamgochian, Lori Lesser, Krista McManus and Andrew Kofsky of Simpson Thacher & Bartlett LLP and Tsar & Tsai Law Firm acted as legal advisors for Yageo Corporation. Tammy Kiely, Barry O Brien, Kyle Jessen and Steve Nielsen of Goldman Sachs & Co. LLC acted as financial advisor and fairness opinion provider and Richard J. Grossman, Christopher M. Barlow, Sal Guerrera, Ivan Schlager, Regina Olshan, Sally Thurston, Kenneth Schwartz, Frederic Depoortere, Audrey Sokoloff and Resa Schlossberg of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors for KEMET Corporation. Alison S. Ressler of Sullivan & Cromwell LLP is advising Goldman Sachs & Co. LLC as financial adviser to KEMET Corporation in its definitive agreement with Yageo Corporation. Innisfree M&A Inc. acted as an information agent for KEMET. Goldman Sachs will receive a transaction fee that is estimated, based on the information available as of the date of announcement of the transaction, at approximately $22 million, all of which is contingent upon consummation of the transaction.

Yageo Corporation (TSEC:2327) completed the acquisition of KEMET Corporation (NYSE:KEM) on June 15, 2020. As a result of the transaction, KEMET is now a wholly-owned subsidiary of Yageo, and KEMET's common stock is no longer listed on any public market. LCS & Partners acted as the legal advisor to KEMET Corporation.