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Electronics Production | July 31, 2008

TDK to acquire EPCOS

TDK and EPCOS have signed a Business Combination Agreement (BCA). The purpose of the agreement is to combine EPCOS with TDK’s activities in the electronic components field.
As a first step, TDK will launch a public tender offer for all outstanding shares of EPCOS and will offer EPCOS' shareholders €17.85 in cash per share. The offer price represents a 52% premium over the three-months average closing share price on the Frankfurt Stock Exchange (Xetra) prior to the date of this announcement and a 29% premium over the closing price (Xetra) on July 30, 2008.

Based on the number of EPCOS shares outstanding, this offer would value EPCOS at approx. €1.2 billion equity value. Including net financial liabilities, pension obligations and minority interests this implies an enterprise value for EPCOS of approx. €1.4 billion. TDK currently holds approx. 2.5% of the current registered share capital of EPCOS and has secured delivery of a further approx. 7.0%.

The offer document is expected to be published after approval by the German Federal Financial Supervisory Authority during August 2008. The offer is subject to certain conditions, including a 50% plus one share minimum acceptance threshold on a fully diluted basis, and regulatory approvals. TDK expects the offer to close by October. It is intended that the all-cash transaction will be financed by a bridge loan.

Following the successful completion of the public tender offer, TDK will immediately begin the process of carving out its relevant passive components business. The objective is to combine this business with EPCOS’ business under a new company, provisionally named TDK EP Components KK. This corporate separation is subject to the approval of TDK’s general shareholders’ meeting.

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