Materion Corp. has agreed to acquire Optics Balzers AG, a provider of thin film optical coatings.
Established in 1946, Optics Balzers is considered a pioneer in thin film optical coatings with a strong brand name and reputation for quality. The company maintains a strong European presence with two R&D and manufacturing locations in Liechtenstein and Germany. In addition, Optics Balzers recently launched a state-of-the-art manufacturing facility in Malaysia which has been a key enabler for growth in Asia. The entire management team, global workforce and facilities will be merged with the Precision Coatings business segment.
With this acquisition, Materion intends to further accelerate its transformation into a global advanced materials solutions provider and significantly expand its geographic reach, extending beyond its core of North America to include Europe and Asia. Complementary technologies across the electromagnetic spectrum are expected to boost the capabilities of the combined thin film optical coatings portfolio and position Materion to capitalize on key megatrends in the areas of life science, consumer and industrial.
“We have long held a deep amount of respect and appreciation for the Optics Balzers business,” Materion President and CEO Jugal Vijayvargiya said in a statement. “Their technical capabilities, product portfolio, end market, and geographic mix, combined with their talented leadership team, make them the ideal partner to accelerate our global growth. The combination creates a global industry leader in optical thin film coating solutions.”
Optics Balzers CEO Dr. Detlev Häusler added: “We are extremely excited to partner with Materion to create this strategic combination to fully leverage the growth potential across all of the markets we serve. Our combined global reach, technical capabilities, and in-house talent should create tremendous value for our customers and expand opportunities for our employees.”
The transaction is valued at approximately $160 million and represents an enterprise multiple of 12x on a TTM basis and 8x pro forma for synergies. The acquisition is expected to be accretive to Materion’s overall growth rate, EBITDA margin, and earnings in the first year, excluding one-time acquisition-related costs. Materion intends to fund the all-cash transaction with a combination of cash on hand and borrowings under its revolving credit facility. Pro forma for the acquisition, net debt to EBITDA is expected to rise modestly to 0.4x on a TTM basis. Closing is planned for the third quarter of 2020, subject to regulatory clearance.
Wells Fargo Securities, LLC served as financial adviser and Jones Day and Baker McKenzie served as legal advisers to Materion.