Acquisition Completion

8 Jan 2007 07:00

IQE PLC08 January 2007 8 January 2007 IQE plc IQE completes £7.5m acquisition of Singapore-based MBE IQE plc ('IQE', 'the Group', AIM: IQE), the UK-based leading outsource supplierof advanced wafers and outsource wafer services to the global semiconductorindustry, has completed the acquisition of MBE Technology Pte Ltd ('MBE'), aSingapore based manufacturer of compound epitaxial ('epi') wafers for a totalcash consideration of S$23 million (£7.5 million). The conditional agreementwas announced on 22 December 2006. This acquisition is immediately earnings enhancing and completes the Group'sstrategy to become the largest supplier of epi-wafers into chip manufacturersfor the global wireless industry. The acquisition provides IQE with a very strong presence in Asia includingexcellent links into Japan, Taiwan, China and Korea. IQE intends to use the newbase in Asia to aggressively sell into the Pacific Rim wireless industry. Theenlarged Group will also have the industry's broadest range of current and nextgeneration products, together with enhanced purchasing power for raw materials. The consideration is based on an initial payment of S$11.5 million (£3.8million) in cash and a further S$11.5 million (£3.8 million) by the issue to thevendor of loan notes bearing interest of 6.5%. The loan notes are repayable inthree instalments in January 2008, June 2008 and January 2009. Noble & Company Limited has placed 25 million new ordinary IQE shares ('NewOrdinary Shares') at 18p per share to raise approximately £4.5 million (beforeexpenses) to finance the cash consideration of the acquisition and workingcapital (the 'Placing'). The New Ordinary Shares were admitted to trading on AIMon 27 December 2006. MBE, incorporated in Singapore 1993, is one of the leading independent globalmanufacturers of compound semiconductor epi-wafers for use in very high-speedelectronic components in the wireless and optical telecommunications industries.It has state-of-the-art facilities in Singapore and a strong team of managementand employees. In 2006, MBE is expected to generate revenues in the order of US$15 million andan EBITDA of over US$ 3.2 million. MBE's growth and premier position are sustained by its strong customer baseacross the Far East including a strategic supplier agreement with a substantialJapanese electronics manufacturer. Dr Drew Nelson, IQE Chief Executive, said: "The addition of a manufacturing and formal sales base in the Far Eastsignificantly increases our profile in the region and establishes a truly globalpresence for the Group. "MBE has established a strong customer base across the Far East, where demandfor epi-wafers continues to see strong growth, particularly for RF/wirelessproducts. By being part of a larger group, MBE will have the support necessaryto exploit the regional opportunities by meeting the rapidly increasing demandsof the mobile communications sector. "Following the successful integration of the EMD acquisition in mid 2006, I amconfident that the benefits of IQE's latest addition to the Group will quicklyadd value to the whole business." Enquiries: IQE plc www.iqep.com. 02920 839400 Dr Drew Nelson, Chief Executive Stuart Hall, Chief Finance Officer Chris Meadows, Investor Relations Noble & Company Limited +44(0) 20 7763 2200 John Llewellyn-Lloyd/ Sam Reynolds College Hill Adrian Duffield/Ben Way +44 (0) 20 7457 2020 Note to Editors IQE is the leading global outsource supplier of advanced semiconductor wafers,with products that cover the whole spectrum of wafer structures, supported by aninnovative outsourced foundry services portfolio that allows the Group toprovide a "one stop shop" for the wafer needs of the world's leadingsemiconductor manufacturers IQE uses advanced crystal growth technology (epitaxy) to manufacture and supplybespoke semiconductor wafers ("epi-wafers") to the major chip manufacturingcompanies, who then use these wafers to make the chips which form the keycomponents of virtually all high technology systems. IQE is unique in beingable to supply wafers using all of the leading crystal growth technologyplatforms. IQE's products are found in many leading edge consumer, communication, computingand industrial applications, including a complete range of wafer products forthe wireless industry, including mobile handsets and wireless infrastructure,WiFi, WiMAX, base stations, GPS, and satellite communications; opticalcommunications, optical storage (CD, DVD), laser optical mouse, laser printers &photocopiers, thermal imagers, leading edge medical products, barcode, highefficiency LEDs and a variety of advanced silicon based systems. These manufacturers are increasingly seeking to outsource wafer production tospecialist foundries such as IQE, in order to reduce overall wafer costs andaccelerate time to market. IQE provides bespoke R&D services to deliver customised materials for specificapplications and offers specialist technical staff to manufacture tospecification either at its own facilities or on the customer's own sites. TheGroup is also able to leverage its global purchasing volumes to reduce the costof raw materials. In this way IQE's outsourced services, provide compellingbenefits in terms of flexibility and predictability of cost, therebysignificantly reducing operating risk. Following the acquisition, IQE employ around 320 people and operate sixmanufacturing facilities located in Cardiff (two) and Milton Keynes in the UK,and in Bethlehem, Pennsylvania and Somerset, New Jersey in the USA, andSingapore. The Group also has nine sales offices located in major economiccentres worldwide. Glossary Epiwafer: A wafer of semiconducting material (made by a crystal growth processcalled epitaxy) for use in the manufacture of microelectronic devices. Twomethods of growing the epitaxial layer on existing silicon or other wafers arecurrently used: metal organic chemical vapour deposition (MOCVD) and molecularbeam epitaxy (MBE). These wafers are typically newer types of semiconductorscomprising some combination of the elements gallium, indium, aluminum, nitrogen,phosphorus or arsenic. Semiconductor: A solid whose electrical conductivity can be controlled over awide range, either permanently by introducing impurities ("doping") ordynamically by applying electric fields. Semiconductor devices with dynamicallycontrolled conductivity are the building blocks of integrated circuits, such asmicroprocessors. Semiconductors may be elemental materials such as silicon andgermanium, or compound semiconductors which comprise more than one element suchas gallium arsenide or alloys such as silicon germanium or aluminium galliumarsenide. Wafer: a thin slice of semiconducting material upon which microcircuits areconstructed. Wafers are thus of key importance in the fabrication ofsemiconductor devices such as integrated circuits. Typically they are made invarious sizes ranging from 1 inch (25.4 mm) to 11.8 inches (300 mm), andthicknesses of the approximately 0.5 mm. RF: Radio Frequency components such as amplifiers, receivers and modulators,which are designed to operate in the microwave and wireless ranges of theelectromagnetic spectrum. This information is provided by RNS The company news service from the London Stock Exchange