Austria-based ams is to acquire 100% of the shares in Heptagon dealing with optical packaging and micro-optics, that, in turn, has acquired MESA imaging an couple of years ago. Heptagon’s headquarters and manufacturing are based in Singapore while its R&D center is in Rueschlikon, Switzerland, and Silicon Valley, USA. The company has over 830 employees including around 120 engineers and 500 manufacturing staff. Heptagon's IP portfolio, primarily in optical packaging, includes more than 250 patent families.
Heptagon’s current 12 month revenue run rate is around USD 90m at negative operating profitability due to current underutilization of production capacity. Heptagon expects substantial revenue growth over the coming years starting mid-year 2017, based on its existing revenue and capacity pipeline and customer commitments. To prepare for this expected growth, Heptagon has already embarked on a major expansion of its Singapore manufacturing capacity with a total capital investment of more than USD 250m in 2016/2017. The expansion is based on a confirmed customer commitment for usage of the additional capacity and is fully funded from existing cash in the business, requiring no funding by ams.
The transaction combines an upfront consideration in cash and shares with a substantial deferred earn-out consideration. The upfront consideration includes USD 64m in cash from available funds, a capital increase of 15% of outstanding shares from authorized capital (excluding subscription rights) and shares from currently held treasury shares for a total value of the upfront consideration of approx. USD 570m. The earn-out consideration will be contingent on future results of Heptagon’s business over fiscal year 2017 with a potential maximum value of USD 285m. Following the upfront share transaction, current Heptagon shareholders which include financial investors, management, and employees are expected to hold around 20% in ams. The transaction is expected to close within the next three months.
Tech.eu estimates the total acquisition price at up to $919 million, or approximately €845 million, if Heptagon hits the targets set for its next fiscal year. "Heptagon has raised tens of millions over the years, including from GGV Capital, Innovations Kapital of Sweden, Innovacom of France, Nokia Growth Partners, High Tech Private Equity, Credence Partners, Jolt Capital, AAC Technologies and Heliconia Capital Management."
Alexander Everke, CEO of ams, commented on the transaction, “Combining ams and Heptagon creates the clear #1 in optical sensing technologies and fast-tracks our innovation capabilities. As a result, we expect ams to drive the optical sensing agenda in the years to come and broaden its market reach. Together with our leadership position in our other sensing focus areas Environmental, Imaging, and Audio, this strategic transaction is going to transform ams into the global leader in sensor solutions.”
Update: Antonio Avitabile, Sony Europe, comments at LinkedIn: "congrats Bo [Ilsoe] and Heptagon team. I understand cash was 64mln USD for an almost 1bln USD deal. Great job on the buying side."