August 27, 2007 – Surface Technology Systems Plc (STS), a UK-based supplier of deep silicon etch and deposition systems, says its parent company Sumitomo Precision Products Co. (SPP) has offered to buy back the 37% of shares in the company it does not own, in order to register the firm as a private company.
The SPP cash buyback offer, based on its per-share price (at a ~48% premium), is worth approximately GBP 1.37 million (US $2.76 million), and values all outstanding STS shares at about GBP 3.67M (US $7.4M).
“The SPP directors believe there are considerable benefits to STS, such as enhanced critical mass and financial resources, in it being developed and funded as a wholly owned subsidiary and privately traded business,” according to Hisao Shiotani, EVP of SPP, in a statement.
STS has been dependent on SPP’s financial support for a number of years, and that reliance has increased significantly this year, according to Nigel Randall, STS’ non-executive chairman, in a regulatory filing. The companies revealed that SPP has already provided an extra GBP 7M/$14.1M (half of which has been drawn down) in addition to guaranteed GBP 19M ($38.3M) in debt facilities.
“The independent directors now believe the future development of the company’s business will be better facilitated as a private company and as a wholly owned subsidiary of SPP,” he said.
In their argument to convince shareholders to sell, SPP and STS also noted that although orders “have recovered significantly” after “a poor start to the year” to GBP 8M ($16.1M) in June (mainly for the Pegasus system), and STS is seeing “encouraging” levels of enquiries for its Pegasus system and new 300mm tool from worldwide production customers, “the risk profile of the business is likely to be high for investors in the mid-term.” In the filing, STS noted that its revenues for FY06 rose 38% to GBP 26.6M ($53.6M), primarily due to system sales in the US and Europe, and swung to a pretax loss of GBP 0.5M ($1.0M).
The deal to take STS private comes just weeks after SPP agreed to acquire Primaxx Inc., an Allentown, PA-based developer of MEMS etch equipment, in order to forge a combined portfolio (including STS) of etch and deposition businesses.