LONDON, UK: CML Microsystems Plc 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.
Microsystems Plc develops mixed-signal, RF, and microwave semiconductors for global communications markets.
Founded in 1982, Microwave Technology Inc. (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, Microwave Technology Inc. (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.
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 Microwave Technology Inc. (MwT) will be earnings enhancing in its first full year of ownership within CML Microsystems.
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.
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