29 Sep 2020
$255 million deal sees Santa Rosa maker of optical filters become part of the much larger materials group.
Alluxa, the California-headquartered maker of high-performance coatings for filters and other precision optical components, is set to become part of the much larger EnPro Industries group after the two firms agreed a deal valuing Alluxa at $255 million.
News of the agreement comes shortly after Alluxa revealed that it had recorded seventeen consecutive quarters of record sales - the most recent period benefiting from demand for optical filters used in critical Covid-19 tests.
Polymerase chain reaction (PCR) equipment, widely regarded as the “gold standard” method for identifying Covid-19 cases, uses fluorescence to identify the presence of the virus, with Alluxa’s optical filters helping to ensure fast and accurate detection.
In particular, the use of optical multiplexing, where multiple dyes are used in PCR equipment to analyze several test samples simultaneously, advanced filter characteristics such as high transmission and steep wavelength edges become more important.
Proprietary plasma technology
Established by CEO/CTO and serial optics industry entrepreneur Mike Scobey in 2007, Alluxa’s success has been built around its development of a proprietary high-speed plasma deposition technique called “SIRRUS”.
The approach is said to allow the company to provide specialized filters and coatings specific to customer requirements across numerous end markets.
Those filters are already being used in several industrial sectors and across a number of growing applications like lidar and flow cytometry, with the Alluxa headcount growing to 76 as the firm continued its expansion.
“This is the beginning of an exciting new chapter for Alluxa, and we are thrilled to join the EnPro family of companies,” said Scobey in a release announcing the deal.
“EnPro, with its extensive capital, commercial, and other resources, is the perfect partner for us as we look to materially accelerate the growth of our company in the coming years.”
Financed using a combination of cash and “rollover” equity for Alluxa’s major shareholders, the deal is expected to close by the end of 2020 - assuming that regulatory approvals are received in time.
Alluxa’s senior management team, which includes Scobey and CFO Jason Mulliner as key shareholders alongside chief commercial officer Peter Egerton, director of technology Rance Fortenberry, and VP of operations Bill Kastanis, is said to be continuing with the business following closure of the deal.
EnPro’s new direction
EnPro’s CEO Marvin Riley commented: “Alluxa is recognized as a leader in specialty optical filters and thin-film coatings technology and complements our growing advanced technology presence.
“This acquisition demonstrates our commitment to investing in attractive technologies, software, and services in high-growth, high-margin markets and is consistent with our strategy, adding advanced industrial technology capabilities, compelling financial characteristics, and an experienced management team.”
Riley added that EnPro believed it could accelerate the growth of Alluxa by matching the firm's existing capabilities and industry relationships with its much larger capital and management resources.
In its most recent financial results, for the quarter ending June 30, NYSE-listed EnPro posted a net loss of $6.5 million as sales fell nearly 25 per cent year-on-year to $247 million.
The Charlotte, North Carolina, company, which employs more than 5000 people, has recently been focused on conserving cash while it reshapes its business portfolio amid the ongoing Covid-19 crisis.
Earlier this year EnPro sold its “Fairbanks Morse” power systems business to a private equity investor for $450 million, bolstering its balance sheet significantly as it looked to move in a different direction.
“Our business has the capital resources and liquidity to emerge from this economic downturn, and the financial flexibility to take advantage of opportunities that arise as markets stabilize,” Riley said last month.