M/A-COM Technology Solutions Inc of Lowell, MA, USA (which makes semiconductors, components and subassemblies for analog RF, microwave, millimeter-wave and photonic applications) has entered into a definitive agreement to sell its Automotive business to Autoliv ASP Inc. The Automotive business represented about 18% of MACOM's consolidated revenue in its fiscal second-quarter 2015 (ended 3 April).
The agreed consideration is $100m in cash, subject to customary working capital and other adjustments, plus the opportunity to receive up to an additional $30m in cash based on the achievement of revenue-based earn-out targets through 2019.
"The divesture of our Automotive business will enable MACOM to realize its full potential as a pure-play high-performance analog company and demonstrates our confidence in achieving high growth rates in our retained core businesses," believes president & CEO John Croteau. "We anticipate our optical and laser businesses will continue to outperform, quickly contributing to consolidated MACOM earnings and cash flow consistent with our pre-divestment expectations for our business as a whole, even without the Automotive business in the portfolio," he adds.
"MACOM's operating margin has expanded to the point that the Automotive business was no longer accretive to our operating model, and therefore not consistent with our long-term strategic vision from both a growth and profitability perspective," continues Croteau. "This divestiture will significantly accelerate MACOM's achievement of its target operating model of 60% non-GAAP gross margin and 30% non-GAAP operating margin," he expects.
MACOM's board of directors has approved the transaction, which remains subject to anti-trust approvals and other customary closing conditions. It is currently expected to close in MACOM's fiscal fourth-quarter 2015.
