Jul 21 2006
IQE, the leading global outsource supplier of customised wafer products and outsource wafer services to the semiconductor industry, has conditionally agreed to acquire Electronic Materials Division (“EMD”), the US epi foundry business from EMCORE Corporation Inc..
Key details of the acquisition:
- IQE has conditionally agreed to acquire the business and assets of EMD from EMCORE
- For the financial year ended 30 September 2005, EMD’s total revenue was $12.2 million, EBITDA was $0.1 million and the value of assets was $9.0 million. The business has continued to grow strongly in the current financial year
- IQE will acquire the assets and business of EMD for a total of $16 million, payable as to $13 million in cash on completion and a further $3 million in cash payable in four equal quarterly payments commencing three months after closing. The deferred consideration will bear interest at 7.5 per cent. per annum
- The acquisition will create the leading global outsource supplier of epi wafers to the wireless market, providing significant opportunities to accelerate sales into existing and new customers by providing the broadest range of current and next generation products
- All of EMD’s employees, including its strong management team, will be offered employment with IQE and it is the intention of the Board that the EMD business will continue to be run as a stand alone entity in New Jersey
- Noble has conditionally placed 87.5 million IQE shares at 13.75 p per share to raise approximately £12 million (before expenses) to finance the consideration and working capital (the “Placing”). The Placing is conditional upon, inter alia, the passing of a shareholder resolution at an extraordinary general meeting (‘‘EGM’’) to be held on 15 August 2006.
Details of the business
EMD provides foundry based production of high performance compound semiconductor electronic epitaxial materials, with a focus on the wireless markets. EMD is based in the US, has approximately 50 employees, ten advanced epitaxial tools and is one of the top five third-party suppliers of epi wafers in the world.
EMD has pursued a similar strategy to that of IQE, in building a strong outsource foundry model for the supply of epi wafers. They have concentrated on HBT based technologies for power amplifier applications, as well as integrated BiFET and GaN structures, and consequently supply a range of highly complementary products to a range of customers different to that of IQE’s own customer base.
The acquisition will position IQE as the leading global outsource supplier of current and next generation products into the wireless marketplace including PHEMT, HBT, integrated BiFET and advanced GaN technologies. The Directors believe this will create significant opportunity to grow revenues within existing IQE and EMD customers by offering all major technology platforms to the enlarged customer base, from the largest, state of the art production capacity in the industry.