IQE Regulatory News (IQE)

20 Jul 2006 07:01

IQE PLC20 July 2006 IQE plc Embargoed for release until 7 a.m. UK time on 20 July 2006 IQE plc (the ''Company'' or ''IQE'') Acquisition IQE, the leading global outsource supplier of customised wafer products andoutsource wafer services to the semiconductor industry, has conditionally agreedto acquire Electronic Materials Division ("EMD"), the US epi foundry businessfrom EMCORE Corporation Inc. (NASDAQ listed: EMKR) ("EMCORE"). Key details of the acquisition: • IQE has conditionally agreed to acquire the business and assets of EMD from EMCORE • For the financial year ended 30 September 2005, EMD's total revenue was $12.2 million, EBITDA was $0.1 million and the value of assets was $9.0 million. The business has continued to grow strongly in the current financial year • IQE will acquire the assets and business of EMD for a total of $16 million, payable as to $13 million in cash on completion and a further $3 million in cash payable in four equal quarterly payments commencing three months after closing. The deferred consideration will bear interest at 7.5 per cent. per annum • The acquisition will create the leading global outsource supplier of epi wafers to the wireless market, providing significant opportunities to accelerate sales into existing and new customers by providing the broadest range of current and next generation products • All of EMD's employees, including its strong management team, will be offered employment with IQE and it is the intention of the Board that the EMD business will continue to be run as a stand alone entity in New Jersey • Noble has conditionally placed 87.5 million IQE shares at 13.75p per share to raise approximately £12 million (before expenses) to finance the consideration and working capital (the "Placing"). The Placing is conditional upon, inter alia, the passing of a shareholder resolution at an extraordinary general meeting (''EGM'') to be held on 15 August 2006. Details of the business EMD provides foundry based production of high performance compound semiconductorelectronic epitaxial materials, with a focus on the wireless markets. EMD isbased in the US, has approximately 50 employees, ten advanced epitaxial toolsand is one of the top five third-party suppliers of epi wafers in the world. EMD has pursued a similar strategy to that of IQE, in building a strongoutsource foundry model for the supply of epi wafers. They have concentrated onHBT based technologies for power amplifier applications, as well as integratedBiFET and GaN structures, and consequently supply a range of highlycomplementary products to a range of customers different to that of IQE's owncustomer base. The acquisition will position IQE as the leading global outsource supplier ofcurrent and next generation products into the wireless marketplace includingPHEMT, HBT, integrated BiFET and advanced GaN technologies. The Directorsbelieve this will create significant opportunity to grow revenues withinexisting IQE and EMD customers by offering all major technology platforms to theenlarged customer base, from the largest, state of the art production capacityin the industry. Details of the Placing and EGM The fundraising is to be effected by means of a placing of 87.5 million newordinary shares of 1p each in the capital of the Company (''New OrdinaryShares'') at an issue price of 13.75p per New Ordinary Share (the "Placing Price"). The New Ordinary Shares have been conditionally placed by Noble with certain new and existing investors. The Placing is conditional upon the passing of a resolution (the "PlacingResolution") by the Company's shareholders at an EGM to authorise the allotmentof the New Ordinary Shares and to disapply pre-emption rights to enable theDirectors to allot the New Ordinary Shares for cash to persons other thancurrent shareholders in the Company. The Directors have convened the EGM atwhich shareholders will be asked to consider and, if thought fit, pass thePlacing Resolution and certain other resolutions. The Placing is alsoconditional, inter alia, on admission (''Admission'') of the New Ordinary Sharesto trading on AIM, a market operated by London Stock Exchange plc (and is themarket on which the Company's existing issued ordinary shares are admitted totrading) occurring by no later than 31 August 2006. The New Ordinary Shares areequivalent to approximately 21.6 per cent. of the Company's enlarged ordinaryshare capital following Admission and the Placing Price represents a discount ofapproximately 6.8 per cent. to the closing mid-market price of an existingissued ordinary share of 14.75p on 19 July 2006, the latest practicable dateprior to the release of this announcement. It is expected that, following the passing of the Placing Resolution at the EGM,dealings in the New Ordinary Shares will commence on or around 16 August 2006.Subject to the passing of the Placing Resolution and Admission becomingeffective not later than 31 August 2006, the New Ordinary Shares will be issuedand will rank pari passu with the existing ordinary shares in the Company. TheEGM is to be held at 9:00 a.m. on 15 August 2006 at the Company's offices atPascal Close, St Mellons, Cardiff, CF3 0LW, at which, inter alia, the PlacingResolution will be proposed. Dr Drew Nelson, President & CEO of IQE plc commented: "This acquisitionrepresents a significant opportunity for IQE to enhance its leading position asthe global supplier of customised wafer products and outsource wafer services tothe semiconductor industry, and to create significant shareholder value throughthe synergistic benefits obtained through combining the two businesses. Theaddition of EMD's products, employees and intellectual property will clearlyenhance IQE's position as the leading player in the epitaxial foundry industry.EMD's current and next generation products are extremely complementary to IQE'sproduct base and its customer base will increase IQE's customer reach to a broadspectrum of world class RF manufacturers. With both MOCVD and MBE wirelessplatforms, as well as diverse range of MOCVD based optical products, IQE will beable to offer its customers the broadest and most advanced range of technologiesand products in the semiconductor industry." Commenting, Scott Massie, Chief Operating Officer of EMCORE said "EMD has beenan innovator in developing state of the art RF materials for over 10 years butas we continue to focus our strategy on broadband infrastructure, solar powerand value-added products, it became clear we needed to find a more strategic fitfor EMD's products and employees". Mr. Massie added, "The sale of this divisionwill lower our cost base, improve gross margins company-wide and permit us tofurther consolidate operations in New Mexico and California." Contacts IQE plc +44(0) 29 2083 9400Dr Drew Nelson, President & CEOStuart Hall, CFOChris Meadows, Investor Relations Noble & Company Limited +44(0) 20 7763 2200John Llewellyn-LloydGraeme Bayley EMCORE CorporationTom Werthan, Chief Financial Officer +1 (732) 271 9090 About IQE IQE is a leading provider of outsource epitaxial wafer services to the globalsemiconductor industry. Its wafer products include a portfolio of compoundsemiconductor wafers for use across the whole spectrum of opto electronic andwireless applications, a range of advanced compound semiconductor substrates,and a comprehensive epi service of advanced products for the silicon industry.The IQE Group operates state of the art manufacturing facilities utilizing allof the key crystal growth technologies, with facilities located in Cardiff andMilton Keynes, UK and in Bethlehem, Pennsylvania, USA. IQE's products are foundin a diverse range of leading edge consumer, communication, computing andindustrial applications, including mobile handsets and wireless infrastructure,optical communications, optical storage (CD, DVD), laser optical mouse, laserprinters & photocopiers, thermal imagers, leading edge medical products,barcode, high efficiency LEDs and a variety of advanced silicon based systems.For further information about the IQE Group, please visit http://www.iqep.com. About EMCORE EMCORE Corporation offers a broad portfolio of compound semiconductor-basedproducts for the broadband, fiber optic, satellite, solar power and wirelesscommunications markets. EMCORE's Fiber Optic segment offers optical components,subsystems and systems for high speed data and telecommunications networks,cable television (CATV) and fiber-to-the-premises (FTTP). EMCORE's Photovoltaicsegment provides products for both satellite and terrestrial applications. Forsatellite applications, EMCORE offers high efficiency Gallium Arsenide (GaAs)solar cells, Covered Interconnect Cells (CICs) and panels. For terrestrialapplications, EMCORE is adapting its high-efficiency GaAs solar cells for use insolar concentrator systems. Through its joint venture participation in GELcore,LLC, EMCORE plays a significant role in developing and commercializingnext-generation High-Brightness LED technology for use in the general andspecialty illumination markets. For further information about EMCORE, visithttp://www.emcore.com. This information is provided by RNS The company news service from the London Stock Exchange