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31 March 2009


Cobham divests M/A-COM Technology Solutions to GaAs Labs

UK-based aerospace technology developer Cobham plc has completed its planned divestment of M/A-COM’s commercial division, now named M/A-COM Technology Solutions Inc (MTS), for up to $90m. The transaction excludes cash and the freehold of the Walker Building in Lowell, MA, USA (valued at $10m).

This follows last May’s $425m agreement for Cobham to acquire both the defense & aerospace and commercial segments of M/A-COM Inc from Bermuda-based Tyco Electronics Ltd. The transaction was completed on 26 September. However, the commercial segment – which provides microwave and RF design solutions and products (silicon, GaAs, AlGaAs, InGaAs, InP and SiGe devices) from facilities in Lowell, MA and Torrance, CA – was deemed non-core to Cobham’s aerospace-focused strategy.

RF and semiconductor technology maker M/A-COM was founded in the 1960s, but has not been an independent entity since 1995, when it was acquired by Pennsylvania-based AMP Inc for $277m, before becoming Tyco Electronics’ Wireless Systems Segment after Tyco International Inc’s acquisition of AMP in 1999.

Now, through an auction process, Cobham has sold MTS to John Ocampo, co-founder, owner and president of Silicon Valley-based private equity fund GaAs Labs LLC, and co-founder of Sirenza Microdevices Inc. The transaction involves $30m in cash, $30m in senior loan notes secured on MTS assets, and $30m dependent on future revenue in 2010-2012. The loan notes carry a rate of interest of 7.5%, which increases over time, and they are repayable in two equal tranches in December 2011 and 2012.

M/A-COM has over 20 years experience of manufacturing GaAs monolithic microwave integrated circuits (MMICs), including acquiring GaAs MMIC maker ITT GaAsTEK of Roanoke, VA in 2000, where 8000ft2 of cleanroom space added to M/A-COM’s 24,000ft2 wafer fab space in Lowell for manufacturing GaAs MESFETs, pHEMTs and silicon LDMOS.

Products include ICs, power transistors and diodes for wireless communications and industrial/military and consumer applications, infrastructure/components for wireless applications such as cellular base-stations and WiMAX infrastructure using RF, microwave and semiconductor-based components, and RFID components for inventory management and asset tracking applications.

In the year to end-September 2007, MTS recorded revenue of $275m and operating profit of less than $10m. Given the significant reductions in end-market demand and the fact that Cobham has retained the MTS cash, the business may need working capital and, if required, Cobham will make available a 12 month secured credit facility for up to $12m.

“Cobham has sold MTS in the face of difficult market conditions, and this allows us to focus on our core business,” says Cobham’s chief financial officer Warren Tucker. “Despite the reduction in valuation multiples and credit availability, we are pleased to have achieved a sensible economic outcome and to have placed MTS in the hands of owners who are specialists in the industry,” he adds.

Last July, GaAs Labs also invested $10m in the fourth round of institutional financing of Mimix Broadband Inc of Houston, TX, USA, which supplies GaAs semiconductors operating from DC to 50GHz for microwave and millimeter-wave applications. GaAs Labs’ John Ocampo is chairman of the board of Mimix.

See related items:

Cobham forms M/A-COM Technology Solutions

M/A-COM’s GaAs fab to be divested by new owner Cobham

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