IRVINE, Calif., June 1 -- Newport Corp. announced today it will buy Spectra-Physics, the optical technologies unit of Thermo Electron Corp., for about $300 million to build up its photonics business.
"This unique combination brings together what we believe are the technology leader in lasers and the technology leader in photonics instrumentation, motion control and automation to create a photonics industry powerhouse," said Robert G. Deuster, chairman and CEO of Newport. "The combined company will become the premier global resource for customers who need to make, manage and measure light."
The purchase price is comprised of $200 million in cash, $50 million in Newport Corp. common stock and a $50 million promissory note bearing 5 percent interest and payable in 2009. The transaction is subject to regulatory approval as well as other customary closing conditions, and is expected to close in July 2004.
Newport said the acquisition is expected to create a company with approximately $400 million in annualized sales that is immediately profitable, excluding transaction-related expenses. The company said it has identified significant opportunities for product, sales and cost synergies.
The acquisition will add over 5000 products sold by Spectra-Physics to the more than 10,000 products offered by Newport.
"While we anticipate that our total sales to microelectronics customers (including semiconductor capital equipment customers) will almost double, the percentage of company sales to these markets will remain approximately one-third of our total sales," Deuster said. "At the same time, we expect that the percentage of our sales to life and health sciences markets will more than double, from less than 10 percent today to over 20 percent after the transaction is consummated, giving the company a broader base and more exposure to this important growth market." Sales to research, industrial, fiber optics and other markets will remain a strong contributor to total sales, but will represent less than half of the total, he said.
The combined company will have more than 2000 employees and 15 manufacturing plants in five countries. It is expected to have better geographic reach, with sales in Europe and Asia increasing to approximately 20 percent of total sales. As a percent of Newport’s total sales in 2003, Europe represented 19 percent and Asia only 10 percent.
Robert J. Phillippy will be named to the newly created position of Newport president and COO. Phillippy is currently vice president and general manager of the US operations for Newport's Industrial and Scientific Technologies Division. Deuster will remain chairman and CEO.
Deuster said he anticipates forming an executive council comprised of senior Newport and Spectra-Physics executives, who, after closing, will oversee the integration activities, strategic direction and overall leadership of the combined company.
Deuster said, "We recognize that integrating two excellent companies of this size will be challenging, but are confident that the talents of the combined leadership teams are equal to the task. The new Newport will certainly benefit greatly from the additional experience and knowledge of the Spectra-Physics team."
Newport said an investor conference call and Webcast are scheduled today at 1 p.m. Eastern time (10 a.m. Pacific) to review the acquisition of Spectra-Physics. For more information, visit: www.newport.com