July 11, 2008 – Ceramics firm Ceradyne has signed a deal to acquire privately held SemEquip in a bid to add a high-margin business in a high-growth sector complimentary to an existing in-house product line. Terms of the deal are a ~$25M cash purchase, plus up to an additional $100M if revenue targets are achieved over the next 15 years. Ceradyne also will pay ~$9M-$11M to cover “incentive compensation” to several SemEquip employees and advisors.

Billerica, MA-based SemEquip develops cluster ion implantation subsystems and ion source materials for making semiconductors (both logic and memory), and has “a significant patent portfolio,” the companies said in a statement. The deal will “significantly extend” the overall company’s presence in the semiconductor industry, particularly expanding Ceradyne’s boron products unit (née EaglePicher Boron, acquired in mid-2007) which mainly produces boron isotopes including ¹¹B, a doping agent for ultrahigh-purity isotopic boron and the key isotope in SemEquip’s B₁₈H₂₂ cluster boron molecule used in its ion beam implantation systems. Those tools will be manufactured in Ceradyne Boron Products’ facility in Quapaw, OK.

David Reed, Ceradyne’s president of North American operations, noted in a statement that the deal “follows the model we have successfully used in the past; that is, the vertical integration of raw material to final product.” He cited similar moves in recent years: in 2004 for former Wacker Chemie unit and longtime partner ESK Ceramics, which makes boron carbide powder, and again in 2007 for Minco’s high-purity fused silica powder used in Ceradyne’s photovoltaic solar ceramic crucibles.

At least one industry watcher thinks Ceradyne got a pretty good deal. TheDeal.com senior writer and “Tech Confidential” blogger Andrea Orr points out that SemEquip, founded in 2000, had a $76M valuation three years ago after a $26M second round of funding, so Ceradyne “appears to have gotten its latest purchase on the cheap.” It won early support from within the chip industry, including collaboration with ATMI and Axcelis on what would eventually become Axcelis Technologies’ Optima HD Imax molecular implant system, but “although the company attracted a lot of interest, judging by its sale price it is still working to make good on its promise,” she writes.