Oxford Instruments plc: Acquisition of Asylum Research Corp.
17 December 2012
Oxford Instruments plc ("Oxford Instruments" or “the Group”), a leading provider of high technology tools and systems for industry and research, announces the acquisition of Asylum Research Corporation (“Asylum Research”), a leading provider of Scanning Probe Microscopes (SPM). The acquisition is subject to customary conditions and is expected to be completed before the end of December 2012.
Asylum Research is an established US company based in Santa Barbara, California, with subsidiaries in the UK, Germany and Taiwan. Its SPM technology is used to image and characterise the properties of surfaces and structures down to the atomic scale providing invaluable information to enable development and exploitation at the nanoscale. Its products are used by academic and industrial customers across the world for a wide range of materials and bioscience applications. The combination of Oxford Instruments and Asylum Research strengthens the Group's Nanotechnology Tools sector. SPM is a fundamental nanotechnology measurement technique and complements the existing portfolio of products and technologies within the Group.
Asylum Research is being acquired from its management for an initial debt free, cash free consideration of US$32.0 million with a deferred element of up to US$48.0 million payable over three years dependent on its performance over that period. Asylum Research generated Earnings Before Interest and Taxation (EBIT) of $1.1 million in the twelve months to 31 December 2011 from revenue in the same period of $19.6 million. It had gross assets of $6.2 million as at 31 December 2011. The acquisition will be funded from existing facilities.
The acquisition of Asylum Research is in line with Oxford Instruments’ 14 Cubed objectives, to achieve a 14% average compound annual growth rate in revenues and a 14% return on sales by the year ending March 2014. This acquisition contributes to the planned acquisition element of the revenue growth objective. While Asylum Research is expected to deliver less than the 14% targeted margin in this and the next financial year, following the acquisition the 14 Cubed margin target for the Group remains unchanged.
As part of Oxford Instruments there will be significant scope to accelerate the inherent strong growth of Asylum Research’s end markets and to deliver substantial improvements in margin over time based on increasing scale. Approximately 60% of Asylum Research turnover comes from customers working in the materials science area where the customer base and routes to market are shared with Oxford Instruments. This opens opportunities for market synergies and the development of new integrated products. The remainder of Asylum Research’s turnover is in the bio-nano area where SPM instruments are used for research into soft materials, such as DNA. This market provides a new growth opportunity for Oxford Instruments.
Commenting on the acquisition, Jonathan Flint, Chief Executive of Oxford Instruments, stated:
"The acquisition of Asylum Research significantly increases our footprint in the nanotechnology space and complements our strong position in electron microscopes with a presence in another fundamental nanotechnology measurement technique. The acquisition also gives us access to the rapidly growing bio-nano market as it allows customers to perform analysis of organic samples in their natural liquid environments, something which cannot readily be done using electron microscopes."