In a move to significantly increase its chip business, Mitel announced Thursday it has acquired United Kingdom-based Plessey Semiconductors from The General Electric Company for $225 million in cash. GEC had been attempting to sell Plessey since last summer.
Kanata, Ontario-based Mitel, a supplier of telecommunications systems as well as semiconductors, said the acquisition will move it into the top 10 chip suppliers for networking and telecom applications.
Plessey has annual sales of about $275 million. About a third of Mitel's business is in semiconductors. Its semiconductor sales totaled $203.8 million in the first three quarters of its fiscal 1997 year, ended Dec. 26, 1997, compared with $160 million in the same period a year ago.
"The acquisition of Plessey is consistent with our goal to increase shareholder value through organic growth and acquisitions," said John B. Millard, president and CEO of Mitel. "This acquisition is a significant step forward in the execution of Mitel's business strategy."
Two years ago, Mitel acquired ABB Hafo AB of Stockholm, Sweden, from Asea Brown Boveri AB to increase its custom and ASIC business. With the Plessey acquisition, Mitel is expanding its reach into RF and mixed-signal IC designs as well as system-level integration to complement its core business, said Francois Cordeau, vice president and general manager of Mitel Semiconductor.
Swindon-based Plessey has five lines of business: ASICs, communications, media, PC systems, power, and automotive. Mitel said Plessey's core competencies include design and technology, mixed signal design and technology, as well as system integration. Plessey has capabilities in high-performance CMOS and leading-edge bipolar technologies, including 0.35-micron CMOS and system-on-a-chip technologies.
Mitel said Goldman, Sachs & Co. served as its financial adviser in the acquisition, which was financed with $310 million of senior secured credit facilities consisting of a revolving credit facility and term loans with maturities of up to six years. The credit facilities were underwritten by Goldman Sachs Credit Partners L.P., as arranger and syndication agent.