Sivers IMA, a Swedish manufacturer of microwave electronics that was once part of Philips, has agreed to buy Compound Semiconductor Technologies Global, known as CST Global, a privately held supplier of semiconductor laser products to the optical communications, industry and defence industries.
The stock-based deal is worth about SEK 151 million (€15.7 million).
CST Global operates a III-V semiconductor foundry in Glasgow, Scotland, where it produces devices in wafer, coated bar, chip and die-on-tape formats. In addition, the company also offers standard, off-the-shelf, 1310nm and 1490nm GPON lasers for the fibre-to-the-home (FTTH) market, shipping around one million devices per month to Asia, according to its website.
Sivers views the technology as complimentary to its own, as they address the growing demand for broadband connectivity using WiGig and 5G technologies. With the acquisition of CST Global, Sivers IMA will be able to deliver products across multiple broadband platforms, the company says.
“We know that data usage and bandwidth needs are constantly increasing and with this acquisition Sivers IMA is now able to offer basic components in these growth areas,” commented Anders Storm, CEO of Sivers IMA.
The purchase price consists of 27,924,998 newly issued shares in Sivers IMA on closing. A possible additional earn-out payment of up to 13,962,499 new shares in Sivers IMA will be issued provided that CST Global’s revenue for calendar year 2017 exceeds £6.5 million. If the maximum number of shares are issued, the sellers of CST Global will then own 50 per cent of the shares in the combined company.
Both companies are expanding with more than 45 per cent year-on-year revenue growth in the first quarter of 2017, though CST Global made a loss for the full fiscal year. Its operations generated revenues of about SEK 40 million (£3.5 million) for the fiscal year ending on 30 June 2016, with a loss before tax of SEK 8 million. Operating as a division within the Sivers IMA Group, CST Global is expected to achieve positive earnings before tax for the full year 2017.
The transaction is subject to a number of approvals and undertakings. The Board of Sivers IMA has also identified the need to add capital to the new group, to invest in operations and meet the goal of achieving profitability. Sivers IMA therefore intends to conduct a rights issue of SEK 80 million as soon as possible after the transaction is completed.