IQE Plc (LON:IQE), the company that supplies advanced wafer products and wafer services to the semiconductor industry, has acquired Galaxy Compound Semiconductors Inc, a specialist manufacturer of antimony substrates used in infrared technology, for up to $14.15m in cash. Separately, IQE is set to raise £20.8m in a placing of 65m shares priced at 32p to fund the acquisition, selectively expand its manufacturing capacity, repay debt and strengthen its balance sheet to position the group for accelerating future growth.

IQE said the acquisition of Galaxy would be immediately earnings enhancing. It is paying between $5.5m and $14.15m for the business based on a multiple of up to 5.5x the company’s 2010 Ebitda. IQE said the acquisition would complement its existing infrared (IR) capabilities at Wafer Technology in Milton Keynes as well as enable multi-site manufacturing, provide access to the large US market and create significant technology benefits. It said the deal positioned it as the world's leading provider of antimony based IR substrates, with diverse applications in imaging for commercial and military applications.

Turning to the fundraising, IQE said it intended to pay off around £10m of debt and use the remaining cash to fund the acquisition and invest in Galaxy’s growth. It also wants to make selective investments to expand its existing manufacturing capacity and boost its balance sheet.

Dr Drew Nelson, IQE’s chief executive, said: “The strategic acquisition of Galaxy positions IQE as the global leader in the rapidly growing market for antimony based infrared materials that are crucial to advanced imaging systems in a variety of commercial and military applications. Galaxy provides IQE with new manufacturing capacity, new products and significant new clients. With funds raised from today’s placing, IQE can also selectively expand its existing manufacturing capabilities and a strengthened balance sheet with net funds will position the Group for further and more rapid growth.”

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