Stratford Managers client Baylin concludes successful $49 million M&A

by: Stratford Managers

Baylin Technologies Inc. (TSX:BYL) (“Baylin”) announced on January 17, 2018, the newly incorporated, wholly-owned subsidiaries of Baylin have acquired (the “Acquisition”) the radio frequency, terrestrial microwave and antenna equipment divisions (the “Business”) of Advantech Wireless Inc. and certain of its affiliates (collectively, “Advantech”) in $49 million up-front purchase price.

“The addition of Advantech’s RF and Microwave divisions is a transformational acquisition for Baylin that will enable us to accelerate growth in our wireless infrastructure segment by broadening our product offering and providing us access to new verticals and geographies,” said Randy Dewey, Baylin’s President and CEO.

“We are very excited to be joining forces with an industry leader that shares the same commitment toward innovation. Wireless carriers have substantial demand for RF and microwave products and as an approved supplier to key carriers, Baylin will be able to more fully take advantage of Advantech’s diverse suite of products,” said David Gelerman, Advantech’s CEO.

The purchase price for the Acquisition is $49 million (subject to customary adjustments), comprised of the following:

– $48 million in cash; and
– $1 million in Baylin common shares (“Baylin Shares”) at a price per share of $3.24, being the volume weighted average price of the Baylin Shares on the Toronto Stock Exchange (the “TSX”) for the five (5) trading day period immediately preceding this press release.

The cash portion of the purchase price for the Acquisition was funded through new indebtedness (see details below) and Baylin’s existing cash resources. 

Advantech may be entitled to additional compensation of between $0.75 million and $3 million in each of 2018 and 2019 conditional on the Business meeting certain EBITDA targets in those years.

Headquartered in Montréal, Québec, Advantech is a leading designer and manufacturer of customizable radio frequency, terrestrial microwave and antenna products for several wireless communications markets. Advantech has developed significant innovations for over 25 years, including pioneering the use of Gallium Nitride technology to create smaller, lighter, and more powerful products. Advantech has over 160 clients in over 150 countries and offices across the globe.

Expected benefits of the Acquisition for Baylin include:

– Based on consensus research estimates, the Acquisition would:
   – be significantly accretive to EPS even before synergies; and
   – result in pro-forma LTM EBITDA of approximately $10 million.

Stratford Managers’ Colleen Kelley, VP & Practice Lead, Business Operations, Mike Pascoe, CEO Advisory and Support Services and Dan Zanetti, VP, Supply Chain and Business Operations, worked with Baylin Technologies Inc. and Advantech on due diligence. Stratford has been retained for integration support following the successful Merger and Acquisition (M&A) process.

For more information, read the original media release from Baylin.

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