Jan 8 (Reuters) - British semiconductor materials maker IQE Plc confirmed it was in advanced talks regarding a potential "significant" acquisition, following a report published in the Times on Tuesday.
IQE, which has a market value of about 170 million pounds ($273 million), is in the process of raising 17.5 million pounds to fund the possible acquisition, the Times reported.
Canaccord Genuity, its broker, is helping IQE sell 70 million new shares at 25 pence each, the newspaper said.
Shares of Cardiff, Wales-based IQE were down 7 percent at 28.55 pence at 0937 GMT on the London Stock Exchange.
The company makes semiconductor wafers that are used in microchips in smartphones, tablets and GPS equipment.
"IQE is evaluating the financing options, which include debt finance and equity finance," it said in a statement.
IQE said the size and terms of any equity financing would be subject to market conditions. The company declined to comment beyond its statement.
Although the lion's share of IQE's sales are made by its phones division, it has also struck a deal to sell to manufacturers of solar panels -- and it is this side of the business that IQE is believed to be in the process of augmenting by acquisition, the Times said.
The company's shares have risen 61 percent in the past year. ($1 = 0.6218 British pounds) (Reporting By Shilpa Hinduja in Bangalore; Editing by Maju Samuel)
I see market cap of $96 million and Total BV of $140 million. It has 32.2 million shares outstanding.
We've said it on this board before that if IQE is to acquire AXTI, it would have to raise capital b/c it doesn't have any money. So it doesn't surprise me that they are exploring the raising of capital. The odd thing is the amount. The article at one point says IQE is raising 17.5 million pounds which would be about 30.0mm US$. If it is for AXTI, that would only be about 10% - 20% of the buyout value. Heck, it would only be 22% of BV. So if AXTI is the target, then Morris Young and team must be comfortable taking a whole lot of IQE stock.
On paper it makes tremendous sense. But the financial facts seem to be less than a perfect fit. The article also states that "Canaccord Genuity, its broker, is helping IQE sell 70 million new shares at 25 pence each." Well there must be a typo because 70 mm pence would be 700,000 pounds or about 1.2mm $US. So the numbers just don't make sense to me unless I'm missunderstanding what they mean by "pence".