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Ceradyne, Inc. has signed a definitive agreement and plan of merger to acquire SemEquip, Inc. for approximately $25 million in cash at closing, plus contingent payments of up to $100 million during the 15-year period following completion of the merger based on revenues achieved over that period by SemEquip. Privately held SemEquip, Inc., based in North Billerica, Mass., is a leader in the development of cluster ion implantation sub-systems and advanced ion source materials for the manufacture of logic and memory chips. SemEquip has a significant patent portfolio related to the use of cluster chemicals in semiconductor ion implantation. SemEquip’s technologies enable the utilization of cluster beam ion implantation for manufacturing advanced integrated circuits at low costs and high throughputs.
This acquisition will expand Ceradyne Boron Products’ business and will significantly extend Ceradyne’s market opportunity in the semiconductor industry. Ceradyne acquired Ceradyne Boron Products, LLC (formerly EaglePicher Boron, LLC) in August 2007. Ceradyne Boron Products mainly produces the boron isotopes 10B and 11B. The boron isotope 11B (enriched boron) is used as a “doping” agent in semiconductor processes where ultra-high-purity isotopic boron is required. This growing market currently accounts for approximately 40% of Ceradyne Boron Products’ sales.
Enriched boron is the key isotope used to manufacture the B18H22 “cluster boron” molecule that SemEquip’s cluster ion beam implantation systems use to achieve next-generation performance in semiconductor ion implantation. B18H22 and related cluster chemicals will be manufactured by the Ceradyne Boron Products facility in Quapaw, Okla.
“The SemEquip acquisition follows the model we have successfully used in the past; that is, the vertical integration of raw material to final product,” said David Reed, Ceradyne’s president of North American Operations. “Ceradyne Boron Products, a 2007 acquisition, will produce the elemental boron for the cluster boron molecule and elemental materials for additional proprietary molecular products for SemEquip. A similar strategy was incorporated in the 2004 ESK Ceramics acquisition, where ESK Ceramics produces the boron carbide powder for Ceradyne’s U.S. armor operations, and again in the 2007 acquisition of Minco, where Minco produces the high-purity fused silica powder for use in Ceradyne’s photovoltaic solar ceramic crucibles.”
Michael Kraft, Ceradyne’s vice president of Nuclear and Semiconductor Business Units, said, “SemEquip leverages Ceradyne Boron Products’ technology, complements our existing semiconductor business, and advances Ceradyne’s strategy to grow commercial revenues through acquiring advanced materials businesses that have high-margin, recurring revenue streams that serve high-growth markets.”
A portion of the closing date consideration and the contingent consideration to be paid by Ceradyne relates to a pre-closing commitment by SemEquip to pay incentive compensation to several of its employees and advisors. This incentive compensation will not increase the total consideration Ceradyne will pay for the acquisition, but it will require Ceradyne to record a pre-tax accounting charge estimated to be in the range of $9 million to $11 million in the quarter during which the acquisition is completed.
Additional information is available at www.ceradyne.com. SemEquip’s website is located at www.semequip.com.