Ichor (ICHR) Announces Acquisition of IMG

Ichor Holdings, Ltd. (NASDAQ: ICHR), a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment, today announced that our wholly-owned subsidiary, Incline Merger Sub, LLC, has entered into a merger agreement with IMG Companies, LLC, a Livermore, CA-based precision machining, welding, brazing, and surface treatment business serving the semiconductor, medical, and aerospace/defense industries.

The total purchase price of $270 million is being financed with approximately $140 million of cash and marketable securities on hand and $130 million of incremental borrowing, pursuant to the recent refinancing and expansion of our credit facility. The acquisition is subject to satisfaction of customary closing conditions, and is expected to close in the fourth quarter of 2021. Cowen is our exclusive financial advisor in relation to the transaction, and our legal counsel was provided by Kirkland & Ellis LLP.

“IMG brings to Ichor additional precision machining capabilities and capacity, as well as advanced manufacturing capabilities such as e-beam and laser welding, precision vacuum and hydrogen brazing, ceramic metallization, and precious metal coating capability,” commented Jeff Andreson, CEO of Ichor. “While IMG’s primary market is the semiconductor equipment industry, this acquisition will also expand Ichor’s customer base, with positions in rapidly-growing segments of the medical, aerospace and defense industries. Additionally, a significant portion of IMG’s revenues are derived from recurring sources such as spares and consumables. We are excited to welcome the IMG team to Ichor, and look forward to continue executing on our key growth strategies, which include complementary acquisitions that are accretive to our operating model.”

IMG is an excellent fit for our acquisition strategies, specifically:

• IMG continues our strategy to expand our product offerings with highly-engineered, value-added products.
• The acquisition of IMG is expected to be accretive to our operating model. For the full year 2022, the acquisition is projected to add at least 100 basis points to gross margin, and at least 40 basis points to operating margin, on a non-GAAP basis.
• The combined business will offer a unique range of manufacturing solutions with an expanded customer base in a diverse range of industries.

We will discuss the acquisition in greater detail on our next upcoming conference webcast, which will take place on Monday, December 6th at 2pm EST / 11am PST. The link will be available on the IR website at https://ir.ichorsystems.com, and directly at https://kvgo.com/ubs/ichor-systems-dec-2021.

IMG Expected Contribution to Financial Results

On an annual basis and based on current industry activity levels, IMG is expected to contribute $70 to $80 million of incremental revenue and $0.32 to $0.38 of non-GAAP EPS. Within these expected ranges, IMG’s contribution to non-GAAP adjusted EBITDA is expected to be $20 to $22 million. These adjustments to calculate non-GAAP adjusted EBITDA are expected to be $2.5 to $3.0 million of interest expense, $2.5 to $3.5 million of taxes, and $5.0 to $5.5 million of depreciation, on an annual basis.

This outlook for non-GAAP EPS and adjusted EBITDA cannot be fully reconciled to GAAP EPS and net income, respectively, the most directly comparable GAAP metrics, due to items that are unknown at this time, such as the incremental amortization of intangible assets expense, stock compensation expense, and discrete tax items, which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

You May Also Be Interested In

• Arcosa stockholders approve $150-per-share cash buyout by CRH
• Panther Minerals closes $3M private placement via Leede Financial
• Stanley Black & Decker agrees to sell Hustler mower unit to Bad Boy Mowers