International Rectifier Sells Chip Unit

The chipmaker sells its power control systems business for $290 million to Vishay.
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International Rectifier

(IRF)

announced the sale of its power control systems business for $290 million in order to focus on more profitable analog and mixed-signal chips.

The El Segundo, Calif., chipmaker said Wednesday that it has reached an agreement to sell the business to

Vishay Intertechnology

(VSH) - Get Report

in an all-cash deal. The companies expect to sign definitive agreements on Nov. 10, with the deal closing in February 2007, subject to regulatory approval.

International Rectifier announced plans to divest the business in April, following earlier moves to de-emphasize the business.

Shares of International Rectifier were up 0.5%, or 19 cents, at $36.16 in midday trading. Vishay's shares slipped 1.9%, or 25 cents, to $13.24.

The power control group accounted for 26% of International Rectifier's $1.17 billion revenue in its 2006 fiscal year. But the business, which includes discrete semiconductor products and automotive modules, has a much slower growth rate than the company's other business lines and has been weighing down profit margins, according to International Rectifier.

"The divestiture enables the company to concentrate more fully its resources and assets on its focus products business and more readily achieve IR's long-term profit margin goals," CEO Alex Lidow said in a statement.

International Rectifier's core business consists of analog and mixed-signal chips designed to address power-consumption and density in consumer electronics and home appliances.

"These products families have allowed IR to capitalize on significant opportunities in some of the largest and fastest-growing markets for power management, including the newest generation of game stations and severs," said Lidow.