C-MAC sells frequency control division to Rakon - Embedded.com

C-MAC sells frequency control division to Rakon

LONDON — C-MAC MicroTechnology is to sell its frequency control products (FCP) division to Rakon, a producer of quartz products and crystal oscillators, for $37 million. The deal is planned for completion on March 2.

C-MAC (Cambridge, England) says this strategic sale will further enable it to exploit the significant market share growth that has already been achieved over the past year in its core business – the design and manufacture of high reliability hybrid microelectronics solutions.

FCP became a separate business division within C-MAC MicroTechnology at the beginning of 2006 and the restructuring was supported by increased investment in new product development, expansion of the sales channel and increased expenditure on marketing activities. The result was four straight quarters of profitability with revenue growth at double the market rate.

C-MAC says double digit growth in the FCP division led to an acquisition approach by Rakon (Auckland, New Zealand) for the unit. The divestiture, which represents approximately one quarter of the business, consists of C-MAC MicroTechnology’s two FCP manufacturing facilities in Lincoln (U.K.), and Argenteuil (France). It also includes a engineering and development facility in Harlow U.K., plus its sales and distribution centers in Shenzhen (China), Durham, NC (U.S.) and Crewkerne (U.K.). The FCP business employs approximately 240 people.

Rakon says that for the 12 months ended August 31, 2006, revenue for the FCP business was NZ$63.8 million (about $44 million) and earnings before interest, taxation, depreciation and amortization (EBITDA) were NZ$7 million (about $5 million). This was a 25 percent increase in revenue and 483 percent increase in EBITDA on the prior year.

Brent Robinson, Rakon's managing director said, “This is a key step in making Rakon a truly global enterprise with a diverse product range and strong relationships with blue chip customers in a wider range of high growth industries. FCP not only has a very strong European base but a global presence that complements and builds on our existing structure.”

Rakon says the FCP business will effectively continue to operate in its current form and under the agreed terms of the acquisition, Rakon have been granted the rights to continue using the C-MAC trademark and logo for a period of 18 months.

Founded in 1967 Rakon designs and manufactures quartz crystals and oscillators for demanding applications such as GPS and wireless communications. Based in Auckland, New Zealand, its has offices in North America, Europe and Asia and claims to supply 50 to 60 per cent of the world’s GPS market.

C-MAC MicroTechnolgy will now focus on high reliability hybrid microelectronics solutions for automotive, aerospace and defense electronics and will additionally engage with specialist industrial/ medical applications.

Initiatives put in place to help support this continued growth including a significant increase in both R&D and manufacturing investment, which will build upon core technology skills in high frequency, high power electronics design. C-MAC MicroTechnology also plans to make strategic acquisitions in the near future.

“Turning around the FCP business into a profitable, independent part of the C-MAC MicroTechnology group was one of our key strategic aims and we are pleased to have served our employees, customers and shareholders through our actions and results.,” said Indro Mukerjee, C-MAC’s CEO. “Our core business moving forward is the design and manufacture of high reliability hybrid microelectronics based systems and products and that is where we have chosen to focus.'

“The divestment will enable us to further invest in key areas of technology such as our advanced RF and Microwave Group where we are developing a range of exciting products to exploit increased penetration of the automotive, aerospace and defense electronics markets. We are also actively evaluating strategic acquisitions, which will support this growth.”

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