Compound Semiconductor Technologies Global Ltd Has Agreed to Be Acquired by Sivers IMA Holding AB

Sivers IMA Holding AB (“Sivers IMA”) has on the 12th of April 2017 entered into an agreement to acquire all shares in Compound Semiconductor Technologies Global Limited (“CST Global”), a privately held company that designs, manufactures and supplies semiconductor lasers and other semiconductor optical products. The main scope is optical communication.

ENGLISH TRANSLATION OF THE OFFICIAL SWEDISH PRESS RELEASE

Sivers IMA Holding AB (“Sivers IMA”) has on the 12th of April 2017 entered into an agreement to acquire all shares in Compound Semiconductor Technologies Global Limited (“CST Global”), a privately held company that designs, manufactures and supplies semiconductor lasers and other semiconductor optical products. The main scope is optical communication. Customers are in the telecommunications, fiber, industry, defense and health sectors. CST Global’s operations generated revenues of approximately 40 MSEK for the fiscal year 2016 (1 July 2015 – 30 June 2016) with a negative EBIT of approximately 8 MSEK. Sivers IMA expects that CST Global as a division within the Sivers IMA group will achieve a positive EBIT for the full year 2017. CST Global’s preliminary numbers show a growth in revenue in the first quarter of 2017 compared to the same period last year by approximately 47 percent and Sivers IMA preliminary figures show a net revenue growth of about 45 percent for the same period, however at negative EBIT.

Summary
• Sivers IMA acquires all shares in CST Global
• The purchase price consists of 27,924,998 newly issued shares in Sivers IMA to be delivered at closing. A possible additional earn out payment of maximum 13,962,499 new shares in Sivers IMA will be issued provided CST Global’s revenue for calendar year 2017 exceeds 6.5 MGBP. If the maximum additional number of shares are issued, the sellers of CST Global will in total receive 41,887,497 shares in Sivers IMA, corresponding to 50 percent of all shares in the company after the transaction. The volume- weighted average price per share of Sivers IMA during the last ten trading days prior to signing of the agreement amounts to 5.40 SEK, meaning the value of the initial purchase price will approximately amount to 151 MSEK.
• With the acquisition comes a number of conditions that must be satisfied at closing, including approval by more than half of the votes casted at the Extraordinary General Meeting of Sivers IMA of the acquisition and also the authorization for the Board to issue the new shares constituting the initial purchase price, that all shareholders loans to CST Global have been converted into shares, that certain undertakings regarding a 12 month lock-up period for the shares received in Sivers IMA have been given, that certain approvals from third parties has been obtained and that the CST Global’s cash available will be at least GBP 400,000.
• Notice of EGM will be announced through separate release.
• The Board of Sivers IMA has identified the need to add capital to the new group, to be used for operations and investments to meet an expected increase in demand and to support the goal of achieving profitability. Sivers IMA therefore intends to conduct a rights issue of approximately 80 MSEK as soon as possible after the transaction is completed.

Background
CST Global is a privately held company that designs, manufactures and supplies semiconductor lasers and other semiconductor-based optical products. The main scope is optical communication. Customers are in the telecommunications, fiber, industry, defense and health. The company is known for its high-performance technical solutions and the company has its own wafer fabrication of III-V-based optical products. Production takes place at the production facility in Glasgow, Scotland. CST Global offers products which are very important for passive optical network (PON), which is used to “Fiber-to-the-home” and “Fiber-to-the-office”.

The market for broadband is showing strong growth. The technologies that are being developed to meet this demand are WiGig, 5G and fiber. With the acquisition of CST Global, Sivers IMA will be able to deliver solutions within all these technologies at the same time.

“We know that data usage and bandwidth needs are constantly increasing and with this acquisition Sivers IMA is now able to offer basic components in these growth areas. This place Sivers IMA as a company in a very advantageous position”, says Anders Storm, CEO of Sivers IMA.

Sivers IMA intends to continue growing CST Global’s product portfolio and customer base. In addition to interesting XPON / GPON products that are focused on broadband, CST Global has during the last year developed products focused on data communication. Products that deliver cutting edge solutions for the data center market and the Metro haul market. These products are based on 100 Gbps optical lasers.

“The acquisition of CST Global reflects a new chapter in our history and is an important part of our strategic plan to establish Sivers IMA as a leading global electronics component supplier within data and telecommunications. This is the first step in a larger plan in which we initially intend to apply for listing at Nasdaq First North, with the objective in the next step to transfer to the Nasdaq Stockholm main list”, says Björn Norrbom, Chairman of Sivers IMA.

“CST Global is delighted to be part of a growing company group focusing on microelectronics, microwaves and photonics. This combination will give us a unique position on a rapidly growing and evolving market, in particular for data- and telecom”, says Neil Martin, CEO of CST Global.

Completion of the acquisition
The purchase price consists of 27,924,998 newly issued shares in Sivers IMA to be delivered at closing. A possible additional earn out payment of maximum 13,962,499 new shares in Sivers IMA will be issued provided CST Global’s revenue for calendar year 2017 exceeds 6.5 MGBP. If the maximum additional number of shares are issued, the sellers of CST Global will in total receive 41,887,497 shares in Sivers IMA, corresponding to 50 percent of all shares in the company after the transaction. The volume-weighted average price per share of Sivers IMA during the last ten trading days prior to signing of the agreement amounts to 5.40 SEK, meaning the value of the initial purchase price will approximately amount to 151 MSEK.

With the acquisition comes a number of conditions that must be satisfied at closing, including approval by more than half of the votes casted at the Extraordinary General Meeting of Sivers IMA of the acquisition and also the authorization for the Board to issue the new shares constituting the initial purchase price, that all shareholders loans to CST Global have been converted into shares, that certain undertakings regarding a 12 month lock-up period for the shares received in Sivers IMA have been given, that certain approvals from third parties has been obtained and that the CST Global’s cash available will be at least GBP 400,000.

Notice of Extraordinary General Meeting of Sivers IMA will be announced in a separate press release.

Erik Fällström owns privately and Keith Halsey owns via company about 21.4 and 42.8 percent, respectively, of the shares and votes in CST Global before conversion of shareholder loans into equity. Furthermore, Erik Fällström and Keith Halsey own via companies about 16.1% percent each of the shares and votes in Sivers IMA. Keith Halsey is a Director of Sivers IMA and has therefore not participated in the proceedings or decisions relating to the acquisition of CST Global. Considering these circumstances, the Swedish Securities Council’s statement AMN 2012: 05 is to be considered, which, inter alia, means that an independent valuation (fairness opinion) will be obtained and that Erik Fällström and Keith Halsey will not vote for their shares for the acquisition of CST Global at the Extraordinary General Meeting of Sivers IMA.

Financing
Unaudited accounts show that both CST Global and Sivers IMA during the first quarter of 2017 delivered strong growth in revenues. CST Global shows a preliminary revenue growth of 47% compared to previous year and Sivers IMA shows a preliminary growth of net revenue of 45% percent for the same period.

The strong growth, even if it is not yet a profitable growth, is a contributing factor to the additional need of funding and the Board of Sivers IMA has identified the need to add working capital and capital for investments for the joint entity, to meet an expected increase in demand and to support the objective of achieving profitable growth. Sivers IMA therefore intends to conduct a rights issue of approximately 80 MSEK as soon as possible after the transaction is completed.

Erik Fällström and Keith Halsey, two of Sivers IMA and CST Global’s largest shareholders, have declared their support for a rights issue and has announced their intentions to subscribe for their pro rata shares in the rights issue.

Sivers IMA’s report for the first quarter 2017 will be published, as previously announced, on the 8th of May 2017.

Advisors
Advisors to Sivers IMA in conjunction with the acquisition have been Hansen Advokatbyrå, Setterwalls Advokatbyrå and Grant Thornton. Advisor to CST Globals shareholders have been Aquaa Partners and Vialex Limited.

Sivers IMA will hold a Webinar on the 18th of April 2017 at 14.00 sharing more information on the acquisition. Registration for the Webinar is done via this link: https://attendee.gotowebinar.com/register/3391023984372185347

For more information, please contact:
Björn Norrbom, chairman of the board Tel: +46 70 591 8800

This information is information that Sivers IMA is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, on 12 April 2017.

Sivers IMA is a leading manufacturer of micro- and millimeter wave products for connecting and quantifying a networked world. Sivers IMA has a long history and is internationally renown as a reliable supplier of high quality components used in telecommunications links, RADAR sensors and test & measurement equipment. Headquarters is located north of Stockholm in Kista, Sweden. Learn more at http://siversima.com.

 

 

By | 2017-09-04T16:19:40+00:00 April 12th, 2017|News|0 Comments

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