E2V.L Regulatory News (E2V)

13 Jul 2006 07:03

e2v technologies PLC13 July 2006 e2v technologies plc RNS Number: For immediate release 13 July 2006 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES OFAMERICA, AUSTRALIA, CANADA OR JAPAN Acquisition of Atmel Grenoble e2v technologies plc ("e2v", the "Company" or the "Group"), a leading designer,developer and manufacturer of electronic tube and sensor components andsub-systems, announces that its subsidiary, e2v technologies S.A.S., hasconditionally agreed to acquire Atmel Grenoble S.A.S. ("Atmel Grenoble") for atotal consideration of US$140 million (approximately £76 million) in cashsubject to a post-completion adjustment based upon the level of net workingcapital in Atmel Grenoble at completion (the "Acquisition"). Atmel Grenoble is a leading designer, manufacturer and distributor ofspecialised electronic components and sub-systems including image sensors andcameras, smart RF transceivers, aerospace-qualified microprocessors andbroadband data converters. Key points •e2v's directors (the "Directors") believe that the Acquisition represents an opportunity to strengthen the Group's position as a major global provider of specialised electronic components and sub-systems. •In particular, the Directors believe that the Acquisition will secure a number of benefits for the Group following the Acquisition (the "Enlarged Group") including: + •an enhanced market position through increased scale and expertise; + •increased technological capabilities; + •a strengthened product range offering cross-selling opportunities; + •an enhanced competitive position in key geographies; + •a significant strengthening of the Group's position in the professional imaging sector; + •strengthened research and development capabilities and opportunities for technology transfer; and + •opportunity to accelerate growth through synergies. •The Acquisition is expected by the Directors to deliver material earnings enhancement (before any impairments for goodwill and amortisation of other intangibles) to shareholders for the year ending 31 March 2008.* •For the year ended 31 December 2005, Atmel Grenoble generated sales of €101.6 million (2004: €82.7 million), operating profit before amortisation of capitalised development expenditure of €17.2 million (2004: €13.7 million) and profit before tax of €16.2 million (2004: €12.7 million).** •The Acquisition is to be funded from new banking facilities totalling £150 million and from the proceeds of a placing of 5,511,727 new ordinary shares to raise approximately £12.5 million being separately announced today (the "Placing"). •The Acquisition is conditional on approval by e2v's shareholders and the French "Ministere de l'Economie, des Finances et de l'Industrie". The Acquisition is expected to complete on 31 July 2006. •A circular seeking shareholder approval will be posted to shareholders shortly. Commenting on the Acquisition, Keith Attwood, Chief Executive of e2v, saidtoday: "The acquisition of Atmel Grenoble is an excellent opportunity for e2v and welook forward to working closely with Atmel Grenoble's experienced managementteam to develop the Enlarged Group's business. "We believe Atmel Grenoble is a great strategic fit for e2v and this acquisitionwill significantly strengthen our sensors sales across our core professionalimaging market, whilst providing exceptional opportunities to extend our reachinto existing market sectors with a broader range of products. In addition, wesee cross-selling opportunities arising from the extended customer base thatbecomes available to the enlarged group. We expect that this strategic alignmentand the synergies identified will lead to significant value creation for e2vshareholders." For further enquiries, please contact: e2v 01245 493 493 Keith Attwood or Mike Hannant N M Rothschild & Sons Limited 0121 600 5252 Roger Hemming or John Byrne Hoare Govett Limited 020 7678 8000 Alex Garton or Lee Morton Gavin Anderson & Co 020 7554 1400 Charlotte Stone or Keith Brookbank There will be a conference call for analysts and investors hosted by GavinAnderson & Co at 10.00am today. To receive a copy of the presentation documentto be discussed on the call, please contact Gavin Anderson & Co on the detailsabove. The dial-in telephone facility for the conference call is as follows: Dial in: +44 1296 317 500Quote passcode (verbally): C436799 This announcement has been issued by, and is the sole responsibility of, e2v andits Directors. N M Rothschild & Sons Limited is acting as financial adviser to the Company inconnection with the matters referred to in this announcement. Hoare GovettLimited is acting as broker to the Company in connection with the Placing. N M Rothschild & Sons Limited, which is authorised and regulated by theFinancial Services Authority in the United Kingdom, is acting exclusively fore2v and no one else in connection with the matters referred to in thisannouncement and will not be responsible to anyone other than e2v for providingprotections afforded to clients of N M Rothschild & Sons Limited or forproviding advice in relation to the matters referred to herein. Hoare Govett Limited, which is authorised and regulated by the FinancialServices Authority in the United Kingdom, is acting exclusively for e2v and noone else solely in connection with the Placing and will not be responsible toanyone other than e2v for providing the protections afforded to the clients ofHoare Govett Limited or for providing advice in relation to the Placing. Notes to Editors e2v technologies e2v is a leading designer, developer and manufacturer of electronic tube andsensor components & sub-systems, which it supplies primarily to OEMs in nichemarkets within three core areas: •Medical and science: sensor technology includes dental X-ray, mammography, life science applications and x-ray microscopy. Electronic tubes are the enabling technology behind radiotherapy cancer treatments, microwave medical therapy and high-energy physics. •Aerospace and defence: sensor technology includes military surveillance, targeting and guidance, space-based imaging and astronomy and radar & electronic warfare. Electronic tubes provide the enabling technology behind radars, electronic countermeasures, electronic warfare and satellite communications. •Commercial and industrial: sensor technology includes marine radars, industrial safety sensors, automotive radars and alarms and thermal imaging cameras used by fire-fighters. Electronic tubes provide enabling technology behind TV broadcast, satellite communications, marine radar and food & industrial processing. The Group has 1,300 employees worldwide with offices in UK, USA, Germany, Franceand a presence in China through the China Britain Business Council, as well as anetwork of distributors covering other key territories. In the financial year ended 31 March 2006, e2v generated an operating profit of£13.8 million on sales of £112.3 million. Export sales accounted for 72% ofrevenue in the year ended 31 March 2006. The net assets of e2v as at 31 March2006 were £43.7 million and gross assets were £100.2 million. Further information on e2v technologies plc is available from its website,www.e2v.com Summary of the Acquisition The Board of e2v announces that its subsidiary, e2v technologies S.A.S., hasconditionally agreed to acquire Atmel Grenoble for a gross aggregateconsideration of US$140 million in cash payable on completion to Atmel ParisS.A.S. ("Atmel Paris"), a wholly-owned subsidiary of Atmel Corporation. Theconsideration is subject to a post-completion adjustment based upon the level ofnet working capital in Atmel Grenoble at the completion of the Acquisition. The Acquisition is to be funded from new banking facilities totalling £150million, of which £94 million will be drawn down following the Acquisition, andthrough the Placing. Extraordinary General Meeting ("EGM") As a result of its size relative to e2v, the Acquisition constitutes a Class 1transaction for the purposes of the Listing Rules, and is therefore conditionalon approval by e2v's shareholders. A circular will shortly be posted to shareholders seeking this approval at anEGM to be held on 31 July 2006 at 10.00am. Information on Atmel Grenoble Atmel Grenoble (formerly known as Thomson-CSF Semiconducteurs Specifiques) is aFrench societe par actions simplifiee (company limited by shares), governed byArticles L. 227-1 to L. 227-20 of the French Code de Commerce. Atmel Grenoblewas incorporated on 15 February 1991 (although it traces its history back to theestablishment of a manufacturing site in Saint-Egreve in 1955) and is currentlyregistered with the "Registre du Commerce et des Societes" of Grenoble undernumber 341-470-656. Its registered office is located at Avenue de Rocheplaine -38120 Saint-Egreve, France. The corporate form of Atmel Grenoble was changed from a French societe anonymeinto a French societe par actions simplifiee on 23 December 2003. AtmelCorporation acquired the entire share capital of Atmel Grenoble from Thales(formerly known as Thomson-CSF) in two steps: (i) 60 per cent. on 22 May 2000and (ii) 40 per cent. on 31 August 2001. The entire issued share capital ofAtmel Grenoble is currently owned by a French societe par actions simplifiee,Atmel Paris, a wholly-owned subsidiary of Atmel Corporation. Atmel Paris'registered office is at Z.I. de Rousset, France, registered with the "Registredu Commerce et des Societe" of Aix-en-Provence under number 430-081-117. Atmel Grenoble's ultimate parent company is Atmel Corporation, a NASDAQ-listeddesigner and manufacturer of advanced semiconductors, including advanced logic,non-volatile memory, mixed signal and RF integrated circuits. Primarily, AtmelCorporation services mainstream global high-volume semiconductor markets andapplications. Atmel Corporation was founded in 1984. Atmel Grenoble is a leading designer, manufacturer and distributor ofspecialised electronic components and sub-systems including: •Imaging sensors and cameras; •Smart RF transceivers; •Aerospace-qualified microprocessors; and •Broadband data converters. Its established range of products addresses specific niches within the medicaland science, the aerospace and defence and the commercial and industrialsectors. The Directors believe that Atmel Grenoble has a leading position in thedental imaging sensor market as well as being an established supplier of camerasto the European defence and aerospace market. Its customers include well-knownoriginal equipment manufacturers ("OEMs"). Atmel Grenoble employed an average of 452 permanent employees (plus anadditional 103 contractors and employees on leave of absence) at its facilitiesin Grenoble during the year ended 31 December 2005. In the year ended 31 December 2005, Atmel Grenoble generated sales of €101.6million, operating profit before amortisation of capitalised developmentexpenditure of €17.2 million and profit before tax of €13.7 million. As at 31December 2005, Atmel Grenoble had gross assets of €115.4 million.** Background to and reasons for the Acquisition e2v's business strategy is built upon four key principles: • To focus its resources on high growth and high margin productopportunities in current and adjacent niche market sectors;• To extend its scope of supply, where appropriate, thereby maximisingrevenues from established market positions as well as developing new marketpositions;• To acquire complementary businesses and technologies to accelerategrowth; and• To continue its internal focus on productivity improvements. The Directors believe Atmel Grenoble represents a key strategic acquisition forthe Group, extending e2v's offering in key product areas and markets as well asextending its geographic footprint through Atmel Grenoble's diverse salesnetwork which extends (as does e2v's) across Europe, North America, and the restof the world. Atmel Grenoble benefits from ongoing relationships with a number of OEMs, whichhave been built up over a long period by the Atmel Grenoble management team. Ithas invested extensively in research and development in order to maintain itstechnological intellectual property ("IP") and has a strong market position in anumber of niche areas, including dental imaging products as well as defence andaerospace cameras. As with e2v, Atmel Grenoble also benefits from an order bookwhich provides a certain amount of visibility as to the future prospects of thebusiness. The Directors believe that the Acquisition represents an opportunity for e2v tostrengthen its position as a major global provider of specialised electroniccomponents and sub-systems to leading OEMs. In particular, the Directors believethat the Enlarged Group will benefit from: •An enhanced market position through increased scale and expertise; •Increased technological capabilities; •A strengthened product range offering cross-selling opportunities; •An enhanced competitive position in key geographies; •A significant strengthening of the Group's position in the professional imaging sector; •Strengthened research and development capabilities and opportunities for technology transfer; and •Opportunity to accelerate growth through synergies. Due to the current complementary nature of products designed and marketed by e2vand Atmel Grenoble, the Acquisition is not dependent on substantialconsolidation of facilities or staff. Indeed, the Directors believe that thecombined resources of the organisation will be able to focus on a broader rangeof market opportunities and more efficient technology and IP development. Funding the Acquisition The consideration payable for the entire issued share capital of Atmel Grenobleis to be satisfied in full through cash to be funded from new banking facilitiesand from the proceeds of the Placing. A consortium of banks (ABN AMRO N.V., Barclays Bank PLC, HSBC Bank plc andLloyds TSB Bank plc) has committed to make available the new banking facilities,totalling £150 million, to the Group for drawdown subject only to the approvalof the Acquisition by e2v shareholders at the EGM. Pursuant to the Placing, the Company is placing 5,511,727 new ordinary shareswith institutional and other investors. The Placing, which is being underwrittenby Hoare Govett Limited and is to be the subject of a bookbuild, will raiseapproximately £12.5 million before expenses. The Placing is not conditional uponthe Acquisition. Terms and conditions in relation to the Placing are set out ina separate announcement released today. Financial effects of the Acquisition The Board of Directors believes that the Acquisition will deliver materialearnings enhancement to shareholders in the financial year ending 31 March 2008.* Directors and management of the Enlarged Group When e2v listed in 2004, a board structure was put in place which would remaineffective if acquisitions were to take place. As such, Keith Attwood will remainChief Executive of the Enlarged Group, and the Directors will continue to beresponsible for their respective functions on the Board of e2v. Atmel Grenoble's senior management (with the exception of the General Managerwho will remain an employee of Atmel Corporation and help with the transfer ofAtmel Grenoble to the e2v Group) will transfer to e2v on their existing termsand conditions. Principal terms and conditions of the Acquisition Agreement The Acquisition, which is conditional upon approval by e2v shareholders and theFrench "Ministere de l'Economie, des Finances et de l'Industrie" in accordancewith Decree Number 2005-1739 dated 30 December 2005, will be completed pursuantto the Acquisition Agreement entered into between e2v and Atmel Paris on 12 July2006. The Acquisition Agreement provides for the transfer of 100 per cent. ofthe share capital and voting rights of Atmel Grenoble on the completion date fora purchase price equal to US$140 million subject to a post-completion adjustmentbased upon the level of net working capital in Atmel Grenoble at the completionof the Acquisition. Current trading and prospects On 5 June 2006, e2v announced its final results for the year ended 31 March 2006, which were prepared under IFRS. Reported profit before tax more than doubledfrom £5.6m to £11.9m and adjusted basic earnings per share were up at 16.89p(2005: 13.72p) per share. The statement accompanying the final results included the following commentsfrom Keith Attwood, Chief Executive: "I am pleased to report an excellent set of results for our first full year as apublic company. We have seen strong sales growth in our electronic tube productgroup and continued progress for our sensor product group. These sales, combinedwith our continued drive for internal efficiencies, underpin this performance. "Our order book suggests continued positive progress through the currentfinancial year, despite the pressures of rising input costs, particularly inenergy and materials. We continue to pursue acquisition targets in both Europeand North America following the successful integration of e2v scientificinstruments." The Directors are pleased with trading during the period since this statement,which remains in line with the Board's expectations for the current year. Themarket continues to provide opportunities across all sectors. The Board remainsconfident that the Group will continue to deliver organic growth in thesesectors in 2006/07. Looking beyond, the Directors will seek to ensure that e2vremains well positioned to take advantage of opportunities which developments inthe sector present. Atmel Grenoble's revenue in the year ended 31 December 2005 was €101.6 millionwhich increased by 23 per cent. compared with 2004, with the business benefitingfrom its investment in research and development over the last few years drivingsales, particularly in the imaging business lines. Operating profit beforeamortisation of capitalised development expenditure in the year ended 31December 2005 also increased by 26 per cent. to €17.2 million (2004: €13.7million).** Since the start of 2006, Atmel Grenoble has continued to trade strongly andunaudited management accounts suggest that sales in the first four months of theyear were ahead of budget. Local management believes that the prospects andoutlook for the current year and medium-term future are positive. Reflecting the above, the Directors believe that the Enlarged Group is wellpositioned to take advantage of the developing sector and are confident as tothe prospects for the Enlarged Group in the current financial year. * This statement is not intended to constitute a profit forecast for the yearending 31 March 2008 or for any other period. Nor should this statement beinterpreted to mean that earnings or earnings per share will necessarily begreater or less than those for the relevant preceding financial period for e2v.Rather, this statement should be construed as a reference to an enhancementabove the earnings that might have been earned during the relevant financialperiod.** The financial information on Atmel Grenoble in this paragraph has beenextracted from the underlying records of Atmel Grenoble. Adjustments have beenmade to conform Atmel Grenoble's accounting policies with the IFRS accountingpolicies of e2v. This information is provided by RNS The company news service from the London Stock Exchange