REG - CML Microsystems PLC - Completion of Microwave Technology Inc Acquisition

CML MicrosystemsAnnouncement

02/10/2023 09:00

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RNS Number : 3403O  CML Microsystems PLC  02 October 2023

2 October 2023

CML Microsystems Plc

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

Completion of Microwave Technology, Inc Acquisition

CML, which develops mixed-signal, RF and microwave semiconductors for global
communications markets, is pleased to announce that it has, today, completed
the acquisition of Microwave Technology, Inc. ("MwT") (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 20 employees and operates from Fremont, California.

The Acquisition

The Acquisition expands the Group's product portfolio, strengthens and
enhances 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 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 total consideration payable for the Acquisition is $13.18m, of which
$7.65m is payable in cash and $5.53m is payable in shares. The cash element,
which is subject to customary post-completion adjustments, is payable in four
tranches; with $1.93m payable on completion, $1.17m payable on the six-month
anniversary of completion, $2.65m payable on the first anniversary of
completion and $1.90m payable on the second anniversary of completion (with
the latter three payments being subject to performance related adjustments).
The $5.53m share element of the consideration is payable via the issue to the
sellers of 864,349 new CML ordinary shares of 5 pence each ("Ordinary
Shares"), valued at a price of 440 pence per share, being the volume-weighted
average price of CML's shares for the 30 days prior to the initial
announcement of the transaction on 17 January 2023, to be issued in three
tranches (the "Consideration Shares"). 592,010 Consideration Shares will be
issued on completion (the "Initial Consideration Shares"), 90,780
Consideration Shares will be issued on the first anniversary of completion,
90,780 Consideration Shares will be issued on the second anniversary of
completion and 90,779 Consideration Shares will be issued on the third
anniversary of completion.

Chris Gurry, CML's Group Managing Director commented: "We are delighted to
finally welcome MwT into the CML Group. Their dedicated and very experienced
team will accelerate our multi-year growth strategy, enhancing the Group's
existing competencies, whilst the strong cultural synergies bode well for the
combined businesses over the medium term."

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 Board expects that MwT will be earnings enhancing in its first full
year of ownership within CML.

It is intended that Dr. Nathan Zommer, who was previously MwT's majority
shareholder and is MwT's current Chairman, will join the CML Board of
Directors in a non-executive capacity.

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.

No further information is required to be disclosed as per Schedule 4 in the
AIM Rules for Companies.

Total Voting Rights

Application has been made to the London Stock Exchange for the 592,010 Initial
Consideration Shares to be admitted to trading on AIM, which is expected to
occur on 3 October 2023.

In conformity with the Financial Conduct Authority's Disclosure and
Transparency rules, CML Microsystems Plc hereby notifies the market that
following the issue of the Initial Consideration Shares, the Company's issued
share capital comprises 16,504,754 ordinary shares of 5p each. The total
number of treasury shares held is 360,675 which do not carry voting rights.

The total number of voting rights in the Group is therefore 16,144,079 (which
excludes ordinary shares held by the Group in treasury).

This figure may be used by shareholders as the denominator for the calculation
by which they will determine if they are required to notify their interest in,
or a change in their interest in, the Group under the FCA's Disclosure and
Transparency Rules.

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

 CML Microsystems Plc

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

Nigel Clark, Executive Chairman

 Shore Capital                           Tel: +44(0)20 7408 4090

 Toby Gibbs

 James Thomas

 Lucy Bowden

 Fiona Conroy (Corporate Broking)

 Alma PR                                 Tel: +44 (0)20 3405 0212

 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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