UK microwave and senior firm e2v Technologies has conditionally agreed to buy QP Semiconductor, a California end-of-life semiconductor supplier, for $65m.
“We are delighted to announce the proposed acquisition of QP, which represents a significant opportunity for the group and is an important step in establishing an operational footprint in the USA,” said e2v CEO Keith Attwood.
“It will increase our market share in the aerospace and defence sector and expand our relationship with contractors to the US Department of Defense,” said Attwood.
QP generates revenue from three principal sources: sales of ICs made from wafers and dies purchased from chip firms exiting the market; redesigned functional equivalents of discontinued and second-sourced semiconductor products; and assembly, packaging, qualification and testing services.
“It produced an operating margin of 35% in 2007 as well as compound annual sales growth of 27% between 2005-2007,” said e2v. “QP will strengthen the Group’s market position in high reliability specialist semiconductors as well as expand e2v’s business from this niche sector by circa 40%.
The US firm was admitted to the Defense Supply Center Columbus (DSCC) qualified manufacturers list in 1998 and supplies over 3,000 qualified semiconductor components on the US DSCC qualified manufacturing list - including militarised microcontrollers and interface devices, memory components and linear and mixed signal devices.
In addition to the $65m, a deferred consideration of up to $15m may be payable to QP shareholders subject to future operating profit performance targets being achieved by QP. E2v may satisfy up to $5m of the deferred consideration through the issue of new ordinary shares to the QP shareholders.
All other deferred consideration is to be issued in cash. The overall cash consideration will be funded through existing bank facilities.