Currently, Sanken’s market value is below the value of Sanken’s holding in its U.S. subsidiary, Allegro MicroSystems, Inc. (“Allegro”).
Allegro conducted a private placement to One Equity Partners (a mid-cap private equity firm) in July 2017. The valuation then was $291 million for a 28.8% stake, which implies a value of $1,010 million for the entire company and $679 million for Sanken’s stake.
We believe Allegro’s value is increasing. Allegro made 44% more net income at peak than at the time of the private placement.
Considering the 44% value increase in Allegro, current value of Allegro is ¥106bn. Compare that with Sanken’s market cap today of just ¥75 billion.
This means that negative value is being assigned to Sanken’s business excluding Allegro.
Further, the low margins of Sanken’s Semiconductor Device business (excluding Allegro) and non-core Power System business pose a serious risk to the Company, and free cash flow has been negative for 4 out of the past 5 years.
All of this is why progress on the value enhancement plan is so important. We believe these problems can be resolved by building A Better Sanken together with the Company.
Click Here for full details, information on the proposals we sent to the Company, and updates on progress the Company has already made.
