KEY POINTS:
Auckland-based Rakon Ltd has entered an unconditional agreement to buy the Frequency Control Products (FCP) business of Britain's C-MAC MicroTechnology for US$37 ($54.9) million.
The acquisition is to be funded by a $60 million equity placement to institutional and habitual investors.
Trading of Rakon shares on the New
Zealand stock exchange have been suspended at Rakon's request, while the placement is completed.
"This is a key step in making Rakon a truly global enterprise with a diverse product range and strong relationships with blue chip customers in a wider range of high growth industries," Rakon managing director Brent Robinson said today.
Rakon said the deal would provide it with leading market positions in the supply of crystal oscillators to the GPS, telecommunications network timing and synchronisation, and aerospace markets.
FCP was a manufacturer of quartz crystal oscillators, primarily focusing on supplying components for use in demanding applications such as telecommunication infrastructure, aerospace and satellite location systems.
The FCP business employed about 240 people with operations in Britain and France.
Rakon also advised today that its forecast earnings before interest and taxation (ebit), for the year ending March 31, excluding the FCP acquisition, would be marginally above $16 million.
That was an increase of about $1.2 million over guidance given in September.
Mr Robinson said the first part of the calendar year had traditionally been slower for Rakon as distribution channels consumed stock built up for the holiday season.
But this year demand had ramped up faster than expected after Christmas, with demand for personal navigation devices , in particular, looking strong through to the end of March.
Rakon also said the acquisition of FCP would significantly increase its worldwide sales coverage, and its penetration in high-growth markets, including network timing synchronisation, wireless base stations and emergency satellite location.
It would enhance Rakon's product range to cover the full range of crystal oscillator products, from commodities to high end Oven Controlled Crystal Oscillators (OCXOs).
Rakon would gain unique intellectual property, in particular in Pluto, OCXO and SC cut crystals products, as well as roadmaps for future product development.
"Telecommunications infrastructure has been growing strongly across the board with the deployment of next generation technologies and renewed investment from network owners," Mr Robinson said.
FCP was a recognised leader in the supply of key components to the telecommunications infrastructure market and with Rakon had the potential to significantly improve that position.
"On top of this there are some short-term opportunities in other areas that shouldn't be overlooked, such as the emergency satellite location market, which is expected to grow strongly over the next couple of years."
For the 12 months ended August 31, FCP's revenue was $63.8 million and earnings before interest, taxation, depreciation and amortisation (ebitda) $7 million.
That was a 25 per cent increase in revenue and 483 per cent increase in ebitda on the prior year.
Rakon shares closed at $4.35 on Friday, having that day hit $4.40, the highest price since the company was listed in May.
- NZPA