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e2v accepts £620M Teledyne bid

12 Dec 2016

North American defense, aerospace and industrial instrumentation firm set to expand its offering for imaging with complementary sensor product line-up.

Teledyne Technologies, the California-headquartered industrial group with expertise across defense, aerospace and imaging applications, has agreed a £620 million cash deal to buy the UK-based imaging sensor company e2v technologies.

The 275p-per-share purchase price, which represents nearly a 50 per cent premium on e2v’s closing stock price from December 9, has been accepted by the UK firm’s board of directors.

Complementary businesses
In a statement to the London Stock Exchange (LSE), where e2v is listed, the companies highlighted the complementary nature of their imaging sensors, with Teledyne CEO Robert Mehrabian saying:

“We have followed e2v for more than a decade. Over time, as both Teledyne and e2v evolved, our businesses have become increasingly aligned. In fact, every business within e2v is highly complementary to Teledyne.”

He added: “There is minimal product overlap. For example, we are both leaders in space and astronomy imaging, but Teledyne largely provides infrared detectors and e2v provides visible light sensors.”

Although e2v is probably best-known for the space imaging applications of its CCD and CMOS sensors, which have captured iconic images of dwarf planet Pluto and comet “67P” in recent years, it also produces microwave devices for cancer radiotherapy and high-performance semiconductor chips.

In its latest half-yearly report e2v announced total sales of £102.8 million, of which £45 million was generated by sales of imaging products.

Machine vision
Aside from the high-profile space imaging, e2v also sells into the machine vision sector. Teledyne’s Dalsa subsidiary and e2v both attended last month’s Vision trade show in Stuttgart, Germany, with Mehrabian noting:

“In machine vision applications, e2v's advanced capabilities in proprietary CMOS sensor design add to Teledyne's strengths in cameras and vision systems. While Teledyne designs advanced mixed-signal circuits for government and commercial applications, e2v's broader product portfolio enhances our offerings and channels to market.”

Describing the acquisition price as an attractive premium, e2v’s chairman Neil Johnson added: “The e2v [board of director] has also considered the merits of being part of a larger, complementary group with enhanced scale and a wider range of capabilities to service its key customers and management and employees having access to the opportunities available in a larger group.”

As a result, the e2v executive team is unanimously recommending that the firm’s shareholders vote in favor of the deal. And according to the LSE statement, institutional investors including AXA, Aviva and Henderson Global, together representing nearly 46 per cent of shareholders, have already signalled their intention to back the deal.

Quantum research
e2v is also closely involved in the UK’s £330 million investment in the development of quantum technologies, known as the National Quantum Technologies Programme (NQTP).

For example the sensor firm’s CTO Trevor Cross, part of the management buy-out team that saw e2v emerge from GEC-Marconi before listing on the LSE back in 2004, chairs the NQTP’s special interest group of industrial partners looking to exploit and apply technologies developed through the quantum research.

Quantum projects involving e2v include a prototype gravity imaging camera for the UK’s Defence Science and Technology Laboratory (DSTL), one of the key backers of the quantum technology push, and an innovative laser-cooled cold-atom trap known as “Freeze-Ray”.

• Following news of the Teledyne bid, e2v’s stock price jumped by around 47 per cent to match the acquisition price of 275p.

Teledyne posted total sales of $2.3 billion in 2015, and in its latest quarterly report the company said sales of imaging products came in at $98.5 million, up 3 per cent on the prior year thanks in part to stronger demand from the machine vision sector.

Shortly before announcing the e2v deal, Teledyne's stock had been trading at an all-time high of nearly $129 on the New York Stock Exchange, equivalent to a market capitalization of just under $4.5 billion.

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