Tuesday, June 10, 2014

On Semi to Acquire Aptina for $400M

Business Wire: ON Semiconductor signes a definitive agreement to acquire Aptina Imaging. The high-performance CMOS image sensors for automotive and industrial markets are said to be the key areas of strategic focus for ON Semi. According to TSR, the worldwide demand for image sensors for automotive and industrial applications is expected to grow at annual compound rate of 16% between 2013 and 2016.

ON Semi will pay approximately $400M in cash to acquire Aptina Imaging, subject to customary adjustments at closing. The acquisition will be funded by available cash on ON Semi’s balance sheet and its existing revolver credit facility.

"The pending acquisition of Aptina enables us to accelerate our growth in the attractive automotive and industrial end-markets by leveraging Aptina’s highly differentiated imaging technologies in conjunction with our wide sales reach and strong operational capabilities," said Keith Jackson, president and CEO of ON Semiconductor. "The addition of Aptina vastly expands our scale and capabilities in image sensors and establishes us as a leader in image sensors for industrial and automotive related applications. I am excited about the possibilities that this transaction presents for both companies."

Based on unaudited results, Aptina’s revenue for last twelve months ending on May 29, 2014, was approximately $532 million with gross and operating margins of approximately 29% and 3%, respectively. ON Semiconductor currently intends to report operational results for Aptina and other image and optical sensor businesses in a separate reporting segment. The transaction has been approved by ON Semi’s and Aptina’s boards of directors and is expected to close during Q3 2014.

Update: Seeking Alpha publishes analyst's comments on the deal.

Update #2: EETimes publishes an article on ON acquisitions history and analyst responses to Aptina purchase. The article quotes Yole table of market shares in 2012, where the top 3 vendors control 58% of the $6.9B market:

Market shares in 2012,
according to Yole Developpement

11 comments:

  1. More here http://blog.aptina.com/semiconductor-acquires-aptina

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  2. wow, that's a crappy valuation for Aptina. In 2008, its revenue was in the 600 mil and gradually creeps up to about 800 mil and then gradually back down. 2013/2014 must have really sucked for Aptina. I guess this is why it's difficult for small players to get in... a gross margin of 29% with a ton of R&D expenses.

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  3. Congratulations to ON and Aptina! Sure feels like deja vu. It will be interesting to see how the management of this evolves! Will the center be San Jose (Aptina) or Rochester (Truesense) or somewhere else? Lots of offices and design centers to manage. Must be close to 15.

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  4. What is their market share after this merge?

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  5. Oh! Aptina shall leave the mobile market!!! w(゚o゚)w

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  6. Do they acquire 100% for $400M or only just more than 50%?

    Crazy times, soon we will not buy image sensors, we will buy ON semi sensors. Who's next?

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  7. http://image-sensors-world.blogspot.be/2014/05/aptina-buys-cfa-manufacturing-assets.html

    The reason is probably that ON semi did not want to produce Aptina sensors in a Micron fab.

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    1. Aptina has been lusting after Nampa CFA for a long time, to recapture the margin on what was for Micron the only profitable segment of the manufacturing relationship. And, not incidentally, the operations management of Aptina is cast in the "real men have fabs" mold.

      From an ON Semi perspective, it's a great fit. They should have bought Avezzano too in a package deal back when it would have been essentially free. There was a time when ON was shopping for another 8" fab. Guess the windows didn't line up.

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  8. A long long time ago, JPL and Kodak produced the first CMOS image sensor with a pinned photodiode (reported April 1995). Photobit spun out of JPL and continued to work with Kodak. Eventually Kodak decided to go into production with CMOS image sensors and found a 3rd member of the team, Motorola for a fab partner. Kodak taught Moto how to make CMOS image sensors, esp. pinned photodiodes. Photobit did most of the logic and surround circuitry, Kodak did the pixel, and Moto received the GDS files to fab the parts. (see EE Times June 23 1997). [Subsequently Moto filed for patents on what they learned from Kodak - patents now owned by the biggest patent troll - see the recent court case with Canon]

    So, Moto crashes in this area. Kodak later crashes. In 1999, Moto (Arizona) spins off ON Semi.

    Photobit has many other customers and does fine. Micron acquires Photobit in 2001. Micron becomes #1 in image sensors and then spins out Aptina. Aptina gradually loses out to Sony, Samsung and even Omnivision.

    Now we have ex-Moto purchasing ex-Kodak and ex-Photobit image sensor companies. I find it sort of ironic and circular. Just goes to show you how you never know how things are going to turn out.

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    1. Thanks for your interesting perspective. I did not know ON was the good old Moto. Indeed, its like everything else...what goes around comes around.

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