17 January 2023
UK’s CML buys Silicon Valley’s Microwave Technology for $18m
UK-based CML Microsystems Plc, which develops mixed-signal, RF and microwave semiconductors for communications applications, has entered into a definitive agreement to acquire Silicon Valley-based semiconductor firm Microwave Technology Inc (MwT), for up to $18m.
Founded in 1982, MwT designs and manufactures gallium arsenide (GaAs)- and gallium nitride (GaN)-based monolithic microwave integrated circuits (MMICs), discrete devices, and hybrid amplifier products for commercial wireless communication, defense, space and medical (MRI) applications. It became part of the IXYS Corp, which was then acquired in 2018 by Chicago-based technology manufacturing company Littelfuse Inc. In 2019, MwT underwent a management buy-out from Littelfuse, while transitioning away from manufacturing to a fabless semiconductor model with a specific focus on MMICs. The business currently has of just over 20 staff and operates from its sole location in Fremont, CA.
CML says that the acquisition will expand its product portfolio, strengthen and enhance its support resources and increase its R&D capabilities, providing essential knowhow and experience in system-level understanding, product manufacturing and packaging techniques. MwT’s products are complementary to CML’s existing range, and most of its focus and client concentration is within the USA. CML’s board believes that there is a significant opportunity to increase its current market share by internationalizing MwT’s products.
The acquisition, which is subject to US regulatory clearance, is valued at a maximum of $18m and will be funded from a mixture of CML’s existing cash resources and the issue to the sellers of new CML ordinary shares in a ratio of about 60/40. The MwT team will provide highly complementary management capability for MMIC products, reckons CML.
MwT’s unaudited US GAAP results for 2022 recorded revenue of $6.5m and a pre-tax loss of $132,000 with net assets of about $2.4m. The acquisition is expected to complete during first-half 2023. The board expects that MwT will be earnings enhancing in its first full year of ownership within CML.
Upon successful closing of the transaction, MwT’s majority shareholder and current chairman Dr Nathan Zommer will join CML’s board of directors in a non-executive capacity (subject to completion of normal regulatory due diligence checks). Zommer is the founder of IXYS Corp and was chairman & CEO of IXYS from 1993 until its acquisition in January 2018 by Littelfuse, of which Zommer is also a director. Prior to founding IXYS, he served in a variety of positions with Intersil, Hewlett Packard and General Electric. Zommer holds a bachelor’s degree and MS in physical chemistry from Tel Aviv University and a Ph.D. in electrical engineering from Carnegie Mellon University.
“He has unrivalled knowledge of the semiconductor world and I have no doubt that CML can benefit greatly from his expertise,” comments CML’s group managing director Chris Gurry.
“MwT’s dedicated and very experienced team will accelerate our multi-year growth strategy,” reckons Gurry. “Their technical knowhow, product range and trading relationships enhance the group’s existing competencies, and a shared strong emphasis on cultural synergy and strategic future direction bodes well for the combined businesses over the medium term. CML is committed to supporting MwT’s existing customer base globally and, in particular, the USA market,” he adds.
“Given the deep understanding of RF and Microwave Technologies that CML has, the combination offers us scaled-up growth with new opportunities,” comments Zommer. “We found a great cultural fit, and the combination of silicon, GaAs and GaN design and production capabilities will provide our customers with wider solutions.”