Auckland-based GPS technology company Rakon has announced it will acquire the assets of French-based competitor Temex for €400,000.
The 30-year-old Temex's annual revenue is €11 million, according to Rakon.
The purchase will "deliver modest returns in the near future and steadily grow over time as improvements are made," Rakon chief executive Brent Robinson said in a statement.
“Temex has excellent synergies with our existing operations in France [acquired in 2007] and the acquisition will significantly accelerate our plans to develop the high performance OCXO [oven-controlled crystal oscillator] markets in space, aviation, under-sea telecommunications, mining exploration and defence which have excellent potential for Rakon,” Mr Robinson said.
“With Temex, we gain penetration into some exciting applications, such as the Galileo navigation satellites [the EU's answer to the US government's GPS network] and transportation vehicles for the International Space Station, as well as various aviation programs.
"The volumes in these may not be large in themselves but the value is very high and enables us to further develop cutting edge technology which can then be applied to higher volume markets,” said Mr Robinson.
Mr Robinson says the price is a significant discount to book value and reflective of the need to invest time and new expertise into bringing Temex up to Rakon’s technical standards.
The purchase will be funded out of existing operating budgets.
"Since then we have successfully moved the high volume, lower margin telecommunications products to our low production cost joint venture in India. This Temex acquisition accelerates our planned expansion in France into higher margin, very high performance applications," Mr Robinson said.
“Rakon’s existing presence and focus in France means we will be able to quickly integrate the Temex business and people into our overall operations.”
The transfer of assets is expected to occur in mid August 2010.
Rakon shares (NZX: RAK) were trading flat at 93 cents in the immediate wake of the news, against a broader market drop of 0.41%.
The company has a 52-week range of 86c to $1.49.
Thu, 22 Jul 2010