Kionix Rohm

In the last article related to the acquisition we provided an explanation of why Kionix chose to sell and why Rohm chose to buy the company. Since that time this explanation has been expanded and discussed throughout the MEMS industry around the world.  More specifically, the discussion has led to the amount paid by Rohm for Kionix. According to the analysis by Yole Finance of the financial statements of Rohm released in Japan in early November of this year the amount was 21.0 Billion Yen or approximately $233.0 million in cash. This is a Price-to-Sales-P/S multiple of 4.5x (the median P/S for MEMS from 2000-2009 is 2.15 and the mean is 3.37) which is a premium of 36% compared to the mean average of 3.37. To extend the discussion of this transaction and provide more insight to CEO’s and shareholders other MEMS companies on how they can capture a premium price when executing such a M&A transaction we discussed how this can be done with Geraldine Andrieux-Gustin and Patrick Keating, the partners at Yole Finance (a newly-formed division in late 2007 of the Yole Group of Companies) who are responsible for M&A services for MEMS companies.

i-Micronews: For the MEMS industry this seems to signal the beginning of a new wave of consolidation by leading mixed signal semiconductor companies and other integrated players to get into the MEMS industry as it enters in the mainstream markets. What do you see happening and how does the transaction involving Kionix and Rohm look to you?

Geraldine Andrieux-Gustin, Partner at Yole Finance:  In our recently released report entitled, “MEMS Players: An Analysis of Financial Performance” available through Yole Developpement we forecasted this trend and provided support for the logic behind the growth strategy of a company like Rohm for making such a transaction. Of course, Kionix was a very attractive target for Rohm in that it has executed its business model very well and moved to the expansion stage rather quickly since it was established to focus on its current product line (after Caliper Networks acquisition of the original Kionix organization in 2000 that led to the formation of Calient Optical Components). With a Series A round of $28.5 million of venture capital in 2004 it secured the necessary financial resources it needed to push the company during its first phase of growth.  Plus, it had a very experienced and successful team led by Greg Galvin who became its CEO in 2002 after serving on the boards of both Calient Networks and the new Kionix. So, the inherent value in the company was probably very evident for Rohm.

i-Micronews:  Now that this transaction is becoming more clear to the market how can existing MEMS companies learn from it and position themselves in a M&A transaction in order to make the optimum deal and extract a premium valuation?

Patrick Keating, Partner at Yole Finance:  To properly position a company really depends upon the subsegment of the MEMS industry a specific organization is involved in right now and how this might fit into the growth strategy of a potential buyer from within the semiconductor industry such as Rohm or an integrated company like Robert Bosch that acquired Akustica.  Plus, you have to consider the cultures, M&A experience and integration planning and execution that a buyer will bring to such a deal. As for capturing a premium valuation this is driven by the M&A process that is used and how a private auction is conducted where the offers of several potential buyers are solicited, reviewed and, in the end, the best offer selected by the selling company. Coupled with this process is the selection of the right advisor with experience in MEMS and technology M&A transactions and the right amount of time to carry out such a transaction from the beginning to the end in a comfortable fashion that will allow the management and shareholders of the company to make the right decision. As Yole Finance we are now doing a hard launch of our M&A services focused on the MEMS industry after preparing ourselves over the past 12-18 months through a soft launch for the volume of transactions we see coming in the next 3-5 years. Geraldine and I feel we are now very well-prepared at Yole Finance to provide these services and we look forward to serving many of the companies we have known for years in the MEMS Industry.



Companies mentioned in this article:

Akustica
www.akustica.com

Calient Networks
www.calient.com

Kionix
www.kionix.com

Rohm
www.rohm.com

Yole Finance
www.yolefinance.com