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Golden Gate inks €250m German carve-out

The San Francisco-based firm has acquired the wireless communications arm of German tech firm Infineon.

San Francisco-based private equity Golden Gate Capital has acquired the wireless communications division of German semiconductor group Infineon Technologies. Contracts were signed on the €250 million deal late on Tuesday.

The transaction allows Infineon to focus on its four remaining business lines. “The divestiture is an important step in our overall refinancing process,” Infineon chief executive Peter Bauer said in a statement.

Infineon’s Wireline Communications (WLC) currently lays claim to more than 20 percent of worldwide market share and ranks number one in its target market of broadband access solutions, the firm said. The carved-out WLC will retain its 600 employees and take on around 300 employees from Infineon’s central group functions.

Since the onset of the credit crunch, large corporates in need of capital have been viewed as a good potential source of deal flow for private equity buyers. As yet, however, there has not been the expected slew of European carve-outs as businesses have been able to access liquidity in the public markets.

Exceptions to this include the sale of Experian’s French transactions processing business to Advent International for €203 million in October and the £3 billion (€3.5 billion; $4.9 billion) sale – agreed but later superceded by another deal – by Barclays Group of its ETF business to CVC Capital Partners.

“The lack of corporate disposals by European companies so far has been principally due to companies either raising money from the public equity markets or delaying decisions on starting disposal processes,” Jacques Callaghan, managing director at corporate finance advisor Hawkpoint, told PEO, “We are currently seeing more European assets coming out of US stressed or distressed corporates and it will only be a matter of time until European companies to feel increasing pressure to offload assets.”

Golden Gate is currently investing from a $1.8 billion fund raised in 2004. The firm, which has about $9 billion under management, invests in technology, retail and financial services sectors. In November last year it bought industrial sand processor US Silica from Harbinger Capital Partners in a $337 million transaction. Other Golden Gate acquisitions in the semiconductor space include Teridian, Vistec and Aeroflex.