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01 Apr 2011
Expanding UK company acquires US firm with expertise in tellurium dioxide acousto-optics, in a deal valued at $13.75M.
Gooch & Housego (G&H), the UK optics manufacturer, is expanding once again with the acquisition of Crystal Technology, a Californian company that makes acousto-optic switches based on tellurium dioxide, as well as electro-optic and fiber-optic components and systems.
The $13.75 million deal for Crystal Technology comes just three months after G&H acquired the active photonic component maker EM4, and provides further evidence of the company’s aggressive expansion and diversification strategy.
Gareth Jones, the CEO of G&H, said of the deal: “In addition to excellent people and top-quality products, Crystal Technology also brings new capabilities in electro-optics and fiber-optics to G&H that support our ongoing diversification into markets such as defense, life sciences and communications.”
Somerset-based G&H is funding the acquisition with a combination of cash and new bank debt agreed with the Royal Bank of Scotland. It paid $10.5 million on completion of the deal, and will pay the $3.25 million balance on March 31 next year.
A crucial aspect of the latest acquisition is the complementary nature of Crystal Technology’s acousto-optic switch technology, which is based on single-crystal tellurium dioxide.
G&H already manufactures Q-switch acousto-optic devices, but these are predominantly based on silica and glass. “While Crystal Technology has a capability in Q-switches, and G&H has become active in tellurium dioxide devices in recent years, there is limited overlap in terms of products and customers,” said the UK company as it announced the acquisition.
“Crystal Technology’s leadership in tellurium dioxide can in part be attributed to its ability to grow some of the best crystals available anywhere in the world,” it added. “The strategic importance of this material is such that G&H had begun to develop its own crystal growth capability, but this acquisition will enable G&H to become self-sufficient.”
Merger creation
The US company, whose other optical products include periodically poled lithium niobate and tunable filters, was previously owned by the much larger TDK-EPC Corporation – created from the merger of the TDK and EPCOS electronic components businesses and headquartered in Tokyo, Japan.
As such, details of Crystal Technology’s individual financial performance were not widely known. But G&H has disclosed that the company’s revenues for the product lines that it is acquiring will be approximately $17 million for the year ending March 31, 2011.
The breakdown of the acquisition price paid by G&H comprised $9.625 million for the Crystal Technology business and $4.125 million for cash and equivalents left in the business – suggesting that the operations had not been particularly profitable.
G&H also updated its trading outlook, saying that conditions remained favorable, and that orders had grown beyond management expectations. “The acquisition of EM4 is progressing to plan as a number of opportunities to supply customers with complex solutions incorporating both active and passive fiber-optic components are developed,” G&H said.
One example of the company’s diversification into life science applications is a supply agreement with Michelson Diagnostics, under which G&H is providing fiber-optic components for Michelson’s “VivoSight” optical coherence tomography scanner for skin cancer diagnosis.
• In early trading after announcing the Crystal Technology acquisition, G&H shares were up around 6%, trading at close to 500p on the London Stock Exchange.
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