Dealmakers are split on the merits of acquiring business units rather than whole companies. When it comes to corporate carveouts, you either love 'em or hate 'em. Tech Con spoke Wednesday afternoon with Richard Grubb, chief financial officer of chipmaker Vishay Intertechnology Inc., and he's one who prefers acquiring companies in whole rather than in pieces.

"Carveouts are difficult, and we'd rather not do them," Grubb said.

Proponents of carveouts often acknowledge some of the unique up-front challenges, which could include cumbersome transition service agreements and haggling over licensing, but also argue that once the deal is done the lack of management redundancies often makes integration easier.

Vishay's anticarveout sentiment didn't stop it in April from shelling out $290 million to acquire several power control business lines of electrical component maker International Rectifier. Vishay announced Wednesday that one piece of the acquisition, which makes automotive modules and subsystems, didn't complement Vishay's operations and is now on the block. For Vishay, selling off the automotive chip unit, which produces roughly $80 million in annual sales, shouldn't take too long, Grubb suggested.

"Prior to closing the International Rectifier deal, I was approached by a couple of interested parties," he said. "I told them, 'Hey, I don't even own it yet.' "

Good thing for Vishay that not everyone shares its sentiment toward carveouts. —Olaf de Senerpont Domis

See July 20, 2006, story from The Deal
See Vishay press release

Tags: Vishay Intertechnology, carveouts, International Rectifier