Materion Corporation today announced it has entered into a definitive agreement to acquire Optics Balzers, AG, an industry leader in thin film optical coatings.
Materion hosted a conference call today at 9:00 a.m. EDT to review the transaction and key investment highlights in more detail. The call is archived on its website.
Established in 1946, Optics Balzers is a pioneer in thin film optical coatings with a strong brand name and reputation for quality. The team has demonstrated an unmatched ability to develop proprietary technology and create value for global customers in attractive high-growth markets. Optics Balzers maintains a very strong European presence with two R&D and manufacturing locations in Liechtenstein and Germany. In addition, Optics Balzers recently launched a state-of-the-art manufacturing facility in Malaysia which has been a key enabler for growth in Asia. The entire management team, talented global workforce, and facilities will be merged with the Precision Coatings business segment.
With this acquisition, Materion further accelerates its transformation into a global advanced materials solutions provider and significantly expands its geographic reach, extending beyond its core of North America to include Europe and Asia. Complementary technologies across the electromagnetic spectrum boost the capabilities of the combined thin film optical coatings portfolio and position Materion to capitalize on key megatrends in the areas of life science, consumer, and industrial.
“We have long held a deep amount of respect and appreciation for the Optics Balzers business. Their technical capabilities, product portfolio, end market, and geographic mix, combined with their talented leadership team, make them the ideal partner to accelerate our global growth. The combination creates a global industry leader in optical thin film coating solutions,” stated Jugal Vijayvargiya, President and CEO.
Dr. Detlev Häusler, CEO of Optics Balzers, added, “We are extremely excited to partner with Materion to create this strategic combination to fully leverage the growth potential across all of the markets we serve. Our combined global reach, technical capabilities, and in-house talent should create tremendous value for our customers and expand opportunities for our employees.”
The transaction is valued at approximately $160 million and represents an enterprise multiple of 12x on a TTM basis and 8x pro forma for synergies. The acquisition is expected to be accretive to our overall growth rate, EBITDA margin, and earnings in the first year, excluding one-time acquisition-related costs. Materion intends to fund the all-cash transaction with a combination of cash on hand and borrowings under its revolving credit facility. Pro forma for the acquisition, net debt to EBITDA is expected to rise modestly to 0.4x on a TTM basis. Materion’s balance sheet remains strong and continues to offer meaningful financial flexibility. Optics Balzers had approximately $67 million in sales on a TTM basis. Closing is planned for the third quarter of 2020, subject to regulatory clearance.
Wells Fargo Securities, LLC served as financial advisor and Jones Day and Baker McKenzie served as legal advisors to Materion.
CONFERENCE CALL INFORMATION
Materion Corporation will host an investor conference call with analysts at 9:00 a.m. Eastern Time, June 8, 2020. The conference call will be available via webcast through the Company’s website at www.materion.com or through www.InvestorCalendar.com. By phone, please dial (877) 407-0778. Callers outside the U.S. can dial (201) 689-8565. A replay of the call will be available until June 22, 2020 by dialing (877) 481-4010 or (919) 882-2331; please reference replay ID number 35230. The call will also be archived on the Company’s website.
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