Looking to broaden its product and customer breadth, ASX-listed memory manufacturer, Legend Corporation, has acquired Adelaide-based electrical vendor, Integrated Electronic Solutions (IES).
Legend will initially pay $23 million including $10 million in cash and $13 million in shares at $0.693 each. The full deal will be determined on a multiple of pre-tax IES earnings up to the end of this financial year. A cash payment for the balance will be deferred until June 30.
IES produces electrical integrated circuits for a wide range of industries including medical, automotive, telecoms, consumer electronics and lighting. The company was established in 1997 after a management buyout of Philips' Adelaide microelectronics operation. It chalked up pre-tax earnings of $5.8 million for the year to June 30.
Legend CEO, Bradley Dowe, said the acquisition delivered new scope in IT design and integrated circuit IP. It was another step in his plan to tackle the convergence market, having also acquired electronics house, Cable Accessories (Cabac), in May.
"This deal will allow us to deliver on our strategy of bringing unique products into the channel," he said. "It gives us the opportunity to broaden."
Dowe said the deal also gave Legend access to new markets locally and abroad. Current IES customers include ResMed, Robert Bosch, Dickson and Electrolux. It also planned to push new and existing IES products based via Legend's existing Asian and South African operations.
"There's not much of an overlap between Legend and IES. But the products are applicable to existing customers," he said. "We will bring this into our IT channel via the Legend business, and into the electrical market via Cabac clients."
He compared the introduction of IES technology to Legend's push from its memory module roots through to flash memory and CE products like set-top boxes.
"We have come a long way from DRAMs," he said.
Combined products would be launched in the New Year.
Dowe declined to discuss what the range would entail.
IES' 100 employees are all expected to be retained, bringing Legend's total headcount to 300.