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Chicago - The first step was taken last week toward a merger that would create a $1.8 billion passive-component powerhouse with strong offerings in both resistors and capacitors.
It is a long way from a done deal, but the idea still caught the industry by surprise. Analysts agreed that if Vishay Intertechnology Inc. and Kemet Electronics Corp. could agree on terms, it would create a company that could compete far more effectively against the big Japanese producers, which are now their major competition.
The ball got rolling on June 26 when Vishay chief executive Felix Zandman wrote a letter to David Maguire, Kemet's chief executive, suggesting they pursue "friendly discussions regarding a merger of the companies through a cash purchase, a share exchange, or the combination of the two."
Vishay's bid comes at a time when the two companies are struggling with slowing sales. Each of them recently instituted cost-containment programs that were responding to the currently weak tantalum-capacitor market. Both companies are now in the midst of restructuring and laying off workers.
Zandman's proposal was seen as a way to create a more powerful company that could take market share away from the Japanese companies that dominate the $15 billion capacitor market, which includes both tantalum and ceramic versions.
Zandman's letter makes a point of it....