Info
Info
News Article

IQE Acquires Kopin Wireless For $75 Million

The acquisition will increase IQE's wireless market share substantially with Kopin Wireless' major customers Skyworks, AWSC, RFMD and TriQuint


IQE plc. has agreed to acquire the compound semiconductor epiwafer manufacturing business Kopin Wireless of Kopin Corporation for a total consideration of $75 million in cash.

Kopin Wireless is a global manufacturer of heterojunction bipolar transistors (HBTs) which are used in power amplifiers, a key wireless component in mobile devices. These devices are produced using MOCVD epitaxial wafer technology.

Since the announcement, IQE's share price has risen by over 13 percent (since the beginning of trade today). The acquisition could be good for shareholders, at least in the short term.





The initial consideration stipulates that $60 million will be payable in cash to Kopin on completion of the acquisition and $15 million will be payable in cash to Kopin on the third anniversary of completion.

IQE says this significantly extends the firm's market share and leadership in wireless industry supply and delivers a market leading position in MOCVD grown HBTs.

Adding Skyworks Solutions, Inc., which has a long standing supply agreement with Kopin Wireless to its customer base will increase IQE’s wireless market share. Skyworks’ current contract with Kopin Wireless runs until the end of 2013 and guarantees a significant proportion of Skyworks’ business.

Kopin Wireless also supplies HBT wafers to Advanced Wireless Semiconductor Company (AWSC), which provides foundry services to Skyworks. Other significant customers of the company include RFMD and TriQuint.

Another plus point is that Kopin Wireless' Taiwan manufacturing facility in Hsinchu, will add to IQE’s global manufacturing footprint and provide the group with a strong position to in access the growing Asian semiconductor market. The company also has US based III-V operations in Taunton, Massachusetts.

Significant cost synergies of at least £7 million per annum are expected from 2014. It is expected that the group will incur one-off exceptional costs of approximately £3 million in 2013 and £2 million in 2014 as part of the plan to achieve these synergies.

IQE will finance the initial consideration through a new banking facility with HSBC for $40 million and $20 million from the proceeds of the placing. The deferred consideration will be paid from the enlarged group’s organic cash flow.

IQE intends to raise approximately £16.5 million through a placing by the Joint Bookrunners, Espirito Santo Investment Bank and Canaccord Genuity Limited, of 56,900,961 new ordinary shares at a price of 29 pence per placing share (8.82 percent. of the group’s enlarged share capital following admission)

The placing price represents a discount of approximately 0.85 per cent. to the closing mid-market price of IQE’s ordinary shares of 29.25 pence on 9th January 2013, being the last practicable date before this announcement. The books for the placing will open with immediate effect and are expected to close no later than 4.30 p.m. today.

The Directors believe that the acquisition will be earnings enhancing from the 2013 financial year onwards.

Trading update for 2012

For the year ended 31st December 2012, IQE expects revenue to be in the range of £87 million to £88 million, with earnings before interest, tax, depreciation and amortisation in the range of £16 million to £17 million and net debt as at 31 December 2012 of approximately £15.5 million.

Drew Nelson, CEO of IQE, says, “This acquisition is our third key transaction in the past 12 months. It significantly enhances our scale and provides us with a highly complementary product line in the wireless space. The transaction marks another major step forward in our risk mitigation strategy, whilst significantly boosting our wireless market share."

He continues, "At the same time, it delivers excellent opportunities for additional business growth, particularly in Taiwan and from there into the Asian semiconductor market. This transaction will be a key driver of significant earnings and cash generation and also brings substantial financial and scale benefits. This will enable the Group to make significant cost savings from FY14 onwards and further underpins our leading position in the supply of wafers to the global compound semiconductor industry."

Terms of the acquisition agreement

Under the terms of the acquisition agreement between Kopin and IQE, IQE KC LLC, a subsidiary of IQE, has agreed to acquire the assets, certain liabilities and the trading business including all necessary contracts, licenses and permissions of the US business of Kopin Wireless.

IQE has agreed to acquire Kopin’s controlling interest in Kopin Taiwan Corporation (KTC) of approximately 90.2 per cent. Following Completion of the Acquisition, there will continue to be a minority interest of approximately 9.8 per cent. in KTC.

Kopin estimated that in the year ended 31st December 2012, 28 percent. of its total group revenues of $131.1 million were derived from sales of GaAs products to Skyworks. In the year ended 31st December 2011 Kopin Wireless generated audited revenues of $66.5 million and in the nine months to 29th September 2012 it has generated unaudited revenues of $44.0 million. Management information indicates that Kopin Wireless generated EBITDA in the same periods of $11.2 million and $7.5 million respectively. The net assets of the Kopin Wireless division being acquired are expected to be approximately $42 million.



AngelTech Live III: Join us on 12 April 2021!

AngelTech Live III will be broadcast on 12 April 2021, 10am BST, rebroadcast on 14 April (10am CTT) and 16 April (10am PST) and will feature online versions of the market-leading physical events: CS International and PIC International PLUS a brand new Silicon Semiconductor International Track!

Thanks to the great diversity of the semiconductor industry, we are always chasing new markets and developing a range of exciting technologies.

2021 is no different. Over the last few months interest in deep-UV LEDs has rocketed, due to its capability to disinfect and sanitise areas and combat Covid-19. We shall consider a roadmap for this device, along with technologies for boosting its output.

We shall also look at microLEDs, a display with many wonderful attributes, identifying processes for handling the mass transfer of tiny emitters that hold the key to commercialisation of this technology.

We shall also discuss electrification of transportation, underpinned by wide bandgap power electronics and supported by blue lasers that are ideal for processing copper.

Additional areas we will cover include the development of GaN ICs, to improve the reach of power electronics; the great strides that have been made with gallium oxide; and a look at new materials, such as cubic GaN and AlScN.

Having attracted 1500 delegates over the last 2 online summits, the 3rd event promises to be even bigger and better – with 3 interactive sessions over 1 day and will once again prove to be a key event across the semiconductor and photonic integrated circuits calendar.

So make sure you sign up today and discover the latest cutting edge developments across the compound semiconductor and integrated photonics value chain.

REGISTER FOR FREE

VIEW SESSIONS

Info
×
Search the news archive

To close this popup you can press escape or click the close icon.
×
Logo
×
Register - Step 1

You may choose to subscribe to the Compound Semiconductor Magazine, the Compound Semiconductor Newsletter, or both. You may also request additional information if required, before submitting your application.


Please subscribe me to:

 

You chose the industry type of "Other"

Please enter the industry that you work in:
Please enter the industry that you work in:
 
X
Info
X
Info
{taasPodcastNotification}
Live Event