REG - CML Microsystems PLC - Acquisition of Microwave Technology, Inc.

CML MicrosystemsAnnouncement

17/01/2023 07:00

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RNS Number : 9567M  CML Microsystems PLC  17 January 2023

CML Microsystems Plc

("CML", the "Company" or the "Group")

Acquisition of Microwave Technology, Inc.

 

CML Microsystems Plc, which develops mixed-signal, RF, and microwave
semiconductors for global communications markets, is pleased to announce that
it has entered into a definitive agreement to acquire Silicon Valley based
semiconductor company Microwave Technology, Inc. ("MwT"), for a total
consideration of up to US$18 million (the "Acquisition").

 

Background to Microwave Technology, Inc.

Founded in 1982, MwT is a recognised leader in the design, manufacturing and
marketing of GaAs and GaN Based MMICs, Discrete Devices, and Hybrid Amplifier
Products for Commercial Wireless Communication, Defence, Space, and Medical
(MRI) applications. It became part of the IXYS Corporation which was then
acquired in 2018 by Littelfuse, Inc., the global technology manufacturing
company headquartered in Chicago. In 2019, MwT undertook a management buy-out
from Littelfuse, at the same time transitioning away from manufacturing to a
fabless semiconductor model with a specific focus on MMICs. The business
currently consists of just over 20 employees and operates from its sole
location in Fremont, California.

The Acquisition

This Acquisition will expand the Group's product portfolio, strengthen and
enhance its support resources and increase its R&D capabilities, providing
essential knowhow and experience in system level understanding, product
manufacturing and packaging techniques. MwT's products are complementary to
CML's existing offering and the large majority of its focus and client
concentration is within the USA. The Board of CML believes there is a
significant opportunity to increase its current market share by
internationalising MwT's products.

The Acquisition, which is subject to US regulatory clearance, is valued at a
maximum of US$18m and will be funded from a mixture of the Company's
significant existing cash resources and the issue to the sellers of new CML
ordinary shares in a ratio of approximately 60/40. The MwT team will provide
highly complementary management capability for MMIC products.

MwT's unaudited US GAAP results for the 12-month period to 31 December 2022
recorded revenue of $6.5m and a pre-tax loss of $132k with net assets of circa
$2.4m. The Acquisition is expected to complete during the first half of 2023
and a further announcement will be made at the appropriate time. The Board
expects that MwT will be earnings enhancing in its first full year of
ownership within CML.

Chris Gurry, CML's Group Managing Director commented: "MwT's dedicated and
very experienced team will accelerate our multi-year growth strategy. Their
technical knowhow, product range and trading relationships enhance the Group's
existing competencies and a shared strong emphasis on cultural synergy and
strategic future direction bodes well for the combined businesses over the
medium term. CML is committed to supporting MwT's existing customer base
globally and, in particular, the USA market.

"Subject to regulatory approval we very much look forward to welcoming the MwT
family into CML and to Nathan joining our Board of Directors. He has
unrivalled knowledge of the semiconductor world and I have no doubt that CML
can benefit greatly from his expertise.

Dr. Nathan Zommer, Chairman of the Board of MwT, comments, " We are excited
that MwT will be part of a growing enterprise with CML. Given the deep
understanding of RF and Microwave Technologies that CML has, the combination
offers us scaled-up growth with new opportunities.

We found a great cultural fit, and the combination of Silicon, GaAs and GaN
design and production capabilities, will provide our customers with wider
solutions. I am looking forward to joining the CML Board going forward".

Upon successful closing of the transaction, it is intended that MwT's majority
shareholder and current Chairman, Dr Nathan Zommer, will join the CML Board of
Directors in a non-executive capacity. Dr. Zommer is the founder of IXYS
Corporation and served as the Chairman of the Board and Chief Executive
Officer of IXYS from 1993 until its acquisition by Littelfuse, Inc. in January
2018, of which Dr Zommer is also a director. Prior to founding IXYS, Dr.
Zommer served in a variety of positions with Intersil, Hewlett Packard and
General Electric. Dr. Zommer holds a bachelor's degree and MS in physical
chemistry from Tel Aviv University and a Ph.D. in electrical engineering from
Carnegie Mellon University.

Dr. Zommer's appointment to the Board is subject to completion of normal
regulatory due diligence checks. A further announcement confirming his
appointment on completion of normal regulatory due diligence checks and
disclosing information in respect of Schedule 2(g) of the AIM Rules will be
made in due course.

The information contained within this announcement is deemed by the Group to
constitute inside information under the Market Abuse Regulations (EU) No.
596/2014.

17 January 2023

Enquiries:

 CML Microsystems Plc                          www.cmlmicroplc.com (http://www.cmlmicroplc.com/)

Tel: +44 (0) 1621 875 500
 Chris Gurry, Group Managing Director

 Nigel Clark, Executive Chairman

 Shore Capital (Nominated Adviser and Broker)  Tel: +44 (0) 20 7408 4090

 Toby Gibbs

 James Thomas

 John More

 Alma PR                                       Tel: +44 (0)20 3405 0205

 Josh Royston

 Andy Bryant

 Matthew Young

About CML Microsystems PLC

CML develops mixed-signal, RF and microwave semiconductors for global
communications markets. The Group utilises a combination of outsourced
manufacturing and in-house testing with trading operations in the UK, Asia and
USA. CML targets sub-segments within Communication markets with strong growth
profiles and high barriers to entry. It has secured a diverse, blue chip
customer base, including some of the world's leading commercial and industrial
product manufacturers.

The spread of its customers and diversity of the product range largely
protects the business from the cyclicality usually associated with the
semiconductor industry. Growth in its end markets is being driven by factors
such as the appetite for data to be transmitted faster and more securely, the
upgrading of telecoms infrastructure around the world and the growing
prevalence of private commercial wireless networks for voice and/or data
communications linked to the industrial internet of things (IIoT).

The Group is cash-generative, has no debt and is dividend paying.

 

 

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