Left behind in merger craze, AMS willing to be buyer or seller

By Eric Auchard

BARCELONA, Nov 11 (Reuters) - Austria's AMS (LSE: 0QWC.L - news) is not sitting still after a previous merger fell apart in the early days of what is now an industry- wide consolidation trend that has gripped many bigger players, the company's chief financial officer said on Wednesday.

Executive Michael Wachsler-Markowitsch said he is ready to use AMS's growing cash for small mergers to help it diversify beyond a focus on supplying the biggest mobile phone industry players, while having room to further reward its shareholders.

Speaking to investors at Morgan Stanley (Xetra: 885836 - news) 's European TMT conference, he said AMS could be a buyer or a seller, 16 months after talks to merge with Anglo-German Dialog failed to create a company with $1.4 billion in annual sales.

Dialog has moved ahead with a bigger acquisition to buy U.S (Other OTC: UBGXF - news) . devicemaker Atmel for $4.6 billion in order to diversify, but faces opposition from activist hedge fund Elliot Associates, which aims to derail the deal saying it weakens Dialog.

AMS remains open to be sold, but potential buyers appear to be busy pursing bigger deals, Wachsler-Markowitsch said.

"Everyone who has looked at AMS before can still look at AMS (Berlin: DQW1.BE - news) again, although I believe these companies are, to a certain extent, engaged, or at least rumoured to be engaged, with a different target in the interim," he said.

"You probably don't have two bites (of the apple) at the same time. From that perspective, at least, I don't expect anything for the next one or two quarters."

The Styrian company's most sizable acquisition was Texas Advanced Optoelectronic Solutions (TAOS), a maker of light sensors, for which it paid about 200 million euros ($215 million) in 2011.

The focus is on bolstering its existing sensor business. "We have a warchest," Wachsler-Markowitsch said.

The company had cash of 206.4 million euros at the end of the third quarter.

AMS may consider boosting the percentage of cash it devotes to share buybacks to close to 10 percent, up from its current level of 6 percent, while also preserving its annual dividend of 25 percent of net income. That leaves room for deals, Wachsler-Markowitsch said.

"Some of (our cash) might be spent on one of the targets that we are looking at," he said, without being more specific. "To avoid dilution with our shareholders, obviously we prefer to pay cash for small acquisitions."

($1 = 0.93 EUR) (Reporting By Eric Auchard)