Broadens Product Portfolio, Adding Highly
Engineered RF Components and Subsystems for Aerospace & Defense
and Communications End Markets
TTM Technologies, Inc. (NASDAQ:TTMI) (“TTM”) has agreed to acquire
Anaren, Inc. (“Anaren”) for approximately $775 million in cash from
affiliates of Veritas Capital.
The transaction combines TTM’s strength in printed circuit board
(“PCB”) manufacturing with Anaren’s product portfolio of unique and
proprietary radio frequency (“RF”) components and subsystems for
the Aerospace & Defense and Networking/Communication end
markets. The combined company will be strongly positioned to
benefit from the expected increased spending towards advanced radar
technology in the Aerospace & Defense market and 5G technology
in the wireless infrastructure market.
“TTM has had a long working relationship with Anaren, serving
beside them on supplier councils, and has always been impressed
with their RF engineering expertise,” said Tom Edman, CEO of
TTM. “We expect that integrating our manufacturing strength
with Anaren’s RF engineering talent will enable us to deliver
superior value-added solutions to our customers in Aerospace &
Defense and our broader commercial markets. We also believe
that the combination will result in meaningful synergies created by
complementary capabilities that will benefit the customers and
employees of both companies.”
“This is a compelling strategic combination that makes for an
exciting new chapter for Anaren,” said Larry Sala, CEO of
Anaren. “We have admired TTM’s manufacturing strength for
some time and believe this acquisition will accelerate the
opportunities and potential for Anaren to grow its offerings.
This combination also positions TTM with industry leading high
frequency electronics engineering and manufacturing capabilities to
better meet our customer needs. We are grateful for our
partnership with Veritas over the past several years. With
Veritas’ support, we strengthened our market position and generated
outstanding growth.”
Strategic Rationale
The acquisition of Anaren is expected to provide a number of
benefits to TTM:
- Broadens TTM’s product portfolio, adding highly engineered and
differentiated RF products and contributes significant RF
engineering talent.
- Increases TTM’s capabilities in the Aerospace & Defense end
market, enabling the company to rapidly develop value added
solutions to better serve the U.S. Defense sector, and positioning
the combined company for further long-term growth.
- Provides new growth opportunity in the industrial, medical and
automotive end markets.
- Accretive to non-GAAP operating margins, adjusted EBITDA
margins, non-GAAP EPS and free cash flow, providing a unique
opportunity to achieve industry-leading financial performance,
create significant value for customers and shareholders, and
provide greater opportunities for employees.
Terms of the Transaction and Financial
Highlights
Anaren, Inc. will be purchased in a debt free, cash free
transaction for $775 million in cash, subject to working capital
adjustments at closing.
In the twelve months ended September 30, 2017, the combined
company would have generated pro forma revenues of $2.8 billion and
pro-forma adjusted EBITDA of $450 million. For a
reconciliation of pro-forma adjusted EBITDA to pro-forma GAAP net
income, see Appendix A to TTM’s presentation filed as Exhibit 99.2
to TTM’s Current Report on Form 8-K filed on December 4th,
2017.
TTM has identified $15 million in pre-tax, run rate, cost
synergies which are expected to be realized within the first two
years after closing. TTM believes that significant additional
synergies will result from other integration efforts over a longer
period of time. This transaction is expected to be accretive to
non-GAAP earnings.
TTM expects to finance the purchase with a $700 million add on
to its existing Term Loan B and cash on hand. In addition,
TTM has received a fully-underwritten commitment from Barclays to
finance the transaction.
The transaction is subject to customary closing conditions,
including regulatory approvals. The transaction is expected
to close in the first half of 2018. Barclays acted as
financial advisor for TTM, and Houlihan Lokey and Evercore acted as
financial advisors for Anaren. O’Melveny & Myers LLP
acted as legal counsel for TTM. Skadden, Arps, Slate, Meagher
& Flom LLP acted as legal counsel for Anaren.
Investor Conference Call and Webcast
TTM will host a conference call on Monday, December 4th, 2017 at
8:30 AM Eastern Time to discuss the combination.
Interested parties can listen to the conference call and view
accompanying slides via webcast at www.ttmtech.com. The call
can also be accessed over the phone by dialing domestic
1-800-239-9838 or international 1-323-794-2551 (ID 9062905).
The replay of the webcast will remain accessible for one week
following the live event on TTM’s website at www.ttmtech.com.
About TTMTTM Technologies, Inc. is a major
global PCB manufacturer, focusing on quick-turn and volume
production of technologically advanced PCBs and the backplane and
sub-system assembly business. TTM stands for time-to-market,
representing how TTM’s time-critical, one-stop manufacturing
services enable customers to shorten the time required to develop
new products and bring them to market. Additional information can
be found at www.ttmtech.com.
About AnarenAnaren is a leading global designer
and manufacturer of high-frequency RF and microwave
microelectronics, components, and assemblies for the space,
defense, and telecommunications sectors. Anaren's engineering
expertise and products are utilized by major manufacturers around
the world, in everything from telecommunications networking
products, fighter-jet jammers, base-station amplifiers, to
communication satellite systems. Anaren’s products are the result
of innovative engineering, design, materials processing, and
world-class volume manufacturing.
About Veritas CapitalVeritas Capital is a
leading private equity firm that invests in companies that provide
critical products and services, primarily technology or
technology-enabled solutions, to government and commercial clients
worldwide, including those operating in aerospace & defense,
healthcare, technology, national security, communications,
government services, energy and education. Veritas Capital seeks to
create value by strategically transforming the companies in which
it invests through organic and inorganic means. For more
information on Veritas Capital and its current and past
investments, visit www.veritascapital.com.
Forward-Looking Statements This release
contains forward-looking statements that relate to future events or
performance. TTM cautions you that such statements are simply
predictions and actual events or results may differ materially.
These statements reflect TTM's current expectations, and TTM does
not undertake to update or revise these forward looking statements,
even if experience or future changes make it clear that any
projected results expressed or implied in this or other TTM
statements will not be realized. Further, these statements involve
risks and uncertainties, many of which are beyond TTM's control,
which could cause actual results to differ materially from the
forward-looking statements. These forward-looking statements
include statements related to: TTM’s ability to successfully
complete the transaction on a timely basis, including receipt of
required regulatory approvals and satisfaction of other conditions;
the conditions of the credit markets and TTM’s ability to issue
debt to fund the transaction on acceptable terms; if the
transaction is completed, the ability to retain Anaren’s customers
and employees, the ability to successfully integrate Anaren’s
operations, product lines, technology and employees into TTM’s
operations, and the ability to achieve the expected synergies as
well as accretion in earnings; competitive pressures and consumer
preferences in TTM’s various lines of business; unknown,
underestimated or undisclosed commitments or liabilities; the
potential impact of the announcement or consummation of the
proposed transactions on the parties’ relationships with third
parties, which may make it more difficult to maintain business and
operational relationships; and potential changes in domestic or
global economic conditions. For a description of additional factors
that may cause TTM’s actual results, performance or expectations to
differ from any forward-looking statements, please review the
information set forth in the “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” sections of TTM’s public reports filed with the
SEC.
Use of Non-GAAP Financial MeasuresThis release
includes information about the combined company’s pro-forma
adjusted EBITDA, which is a non-GAAP financial measure. TTM
presents non-GAAP financial information to enable investors to see
TTM through the eyes of management and to provide better insight
into TTM’s ongoing financial performance.
A material limitation associated with the use of the above
non-GAAP financial measures is that they have no standardized
measurement prescribed by GAAP and may not be comparable to similar
non-GAAP financial measures used by other companies. TTM
compensates for these limitations by providing full disclosure of
each non-GAAP financial measure and reconciliation to the most
directly comparable GAAP financial measure. However, the
non-GAAP financial measures should not be considered in isolation
from, or as a substitute for, financial information prepared in
accordance with GAAP.
Contacts:
TTM InvestorsSameer Desai,Senior Director,
Corporate Development & Investor
RelationsSameer.desai@ttmtech.com 714-327-3050
Anaren and Veritas CapitalAndrew Cole/Patrick
ScanlanSard Verbinnen &
Co212-687-8080veritascapital-svc@sardverb.com
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