HAYWARD, Calif., Dec. 16, 2020 /PRNewswire/ -- Ultra Clean
Holdings, Inc. (Nasdaq: UCTT), today announced that it has entered
into a definitive agreement to acquire Ham-Let (Israel-Canada) Ltd. ("Ham-Let"), a public company
listed on the Tel Aviv stock
exchange, for approximately $348
million, which includes $287
million of equity value plus $61
million of net debt. Ham-Let is a global leader in the
development, manufacturing and distribution of Ultra-High Purity
and industrial flow control systems – valves, fittings, hoses and
connectors largely used for the manufacturing of today's most
complex semiconductor devices.
"Today's acquisition is another meaningful step in the execution
of our long-term strategy to grow and diversify our business by
adding complementary, high value, high margin product offerings to
our growing portfolio of capabilities," said Jim Scholhamer, CEO. "Upon completion of this
acquisition, UCT will be able to offer our existing semiconductor
equipment customers a stronger and even broader set of offerings.
UCT will also gain access to a new set of customers in the
semiconductor fab infrastructure and sub-fab market, which
represents an excellent platform for growth."
"This transaction represents a significant benefit to Ham-Let,
its employees, its customers and its shareholders," added
Amir Widmann, CEO of Ham-Let. "By
leveraging UCT's global footprint, we can deliver a broader range
of solutions and increase the combined company's strategic
relevance to its customers. We look forward to working closely with
UCT to ensure a smooth transition."
Under the terms of the agreement, the total transaction value is
approximately $348 million and is
being structured as an all-cash transaction. UCT has secured a
committed debt financing through Barclays to fund the acquisition
and repay Ham-Let's indebtedness. Concurrently, UCT is reviewing
its overall capital structure to ensure the maintenance of a strong
balance sheet and financial flexibility.
UCT anticipates the acquisition to be accretive to shareholders
on an adjusted basis within the first year after close.
Key Strategic and Financial Benefits
Expands Served Markets: The transaction broadens UCT's
semiconductor SAM by more than $2
billion and provides access to a new set of customers in the
semiconductor fab infrastructure and sub-fab market. Additionally,
Ham-Let has current relationships with many Original Equipment
Makers ("OEM") and Integrated Device Manufacturers ("IDM")
customers and is currently a supplier to UCT.
Vertical Integration: Adding Ham-Let's offerings
increases UCT's suite of capabilities, strengthening the company's
leading market position and competitive edge. Ham-Let's high value,
high purity components address a critical need increasingly
demanded by leading OEM's and IDM's. The strength of UCT's sales
channel to OEM's provides an opportunity for share gain.
Increased Shareholder Value/Synergies: The acquisition is
expected to drive long-term shareholder value through cost and
revenue synergy opportunities. Annual cost synergies will be driven
primarily from elimination of duplicate public company costs,
elimination/combination of redundant facilities, operational
efficiencies and other general administration areas. Preliminary
estimates for cost savings are approximately $20 million, and will be realized incrementally
over the next three years. UCT expects additional potential upside
from revenue synergies created by capitalizing on cross-selling
opportunities.
($ in
millions)
|
UCT
LTM
|
Ham-Let
LTM(3)
|
Combined
LTM
|
|
GAAP
|
Non-GAAP
|
GAAP
|
Non-GAAP
|
GAAP
|
Non-GAAP
|
Revenue
|
$1,315
|
|
$201
|
|
$1,517
|
|
Gross
Margin(1)
|
20.60%
|
21.10%
|
25.10%
|
25.80%
|
21.20%
|
21.70%
|
Operating
income(1)
|
$93
|
$141
|
$13
|
$16
|
$106
|
$157
|
7.00%
|
10.70%
|
6.50%
|
7.90%
|
7.00%
|
10.30%
|
Adjusted
EBITDA(2)
|
|
$168
|
|
$24
|
|
$192
|
|
|
12.80%
|
|
11.80%
|
|
12.60%
|
|
|
|
|
|
|
|
LTM reflects
unaudited results for the last twelve months ended Sept 25, 2020
for UCT and Sept 30, 2020 for Ham-Let
|
(1) Non-GAAP
amounts exclude amortization of intangible assets, restructuring
charges, executive transition costs,
acquisition costs, fair value
adjustments, depreciation adjustments, stock-based compensation and
the tax effects of the foregoing adjustments
|
(2) Adjusted
EBITDA is defined as net income (loss) plus provision for (benefit
from) taxes, interest expense, other expense (income),
depreciation
expense, amortization expense,
stock-based compensation expense, and other infrequent or unusual
items
|
(3) Ham-Let's
financial data is unaudited and based upon amounts prepared by
Ham-Let under IFRS, translated to USD using the average
NIS/USD exchange rate for the
twelve-months ended Sept 30, 2020. There are no material
differences between the IFRS amounts and what
such amounts would have been if
recorded in accordance with U.S. GAAP
|
Source: Company
filings
|
|
|
|
|
|
|
Timing and Approvals
The transaction is expected to close in the latter part of Q1 or
early Q2, 2021, subject to the completion of customary closing
conditions, including (i) the expiration or termination of any
waiting period under, or the receipt of approvals under, applicable
foreign competition laws, (ii) the expiration of a period of at
least fifty days after the filing of a merger proposal executed in
accordance with Section 316 of the of the Companies Law 5759-1999
of the State of Israel with the
Registrar of Companies of the State of
Israel and (iii) the expiration of a period of at least
thirty days after the approval of the transaction by the
shareholders of Ham-Let.
Barclays acted as lead financial advisor to UCT and in its role
as lead bookrunner, has provided committed acquisition financing,
subject to customary closing conditions precedent to funding.
Meitar Law Offices (Israel) served
as UCT's lead legal advisor with the assistance of Davis Polk and Wardwell LLP. Needham and Co.
provided a fairness opinion to UCT. Naschitz, Brandes, Amir Law
Offices served as legal advisor to Ham-Let and
PricewaterhouseCoopers provided a fairness opinion.
Conference Call Details
A conference call to discuss the agreement will take place at
8:00 a.m. PT on Thursday, December 17,
2020 and can be accessed by dialing 1-844-826-3034 or
1-412-317-5179. No passcode is required. A replay of the call will
be available by dialing 1-877-344-7529 or 1-412-317-0088 and
entering the access code 10150627. The Webcast will be available on
the Investor Relations section of the Company's website at
http://uct.com/investors/events/.
About Ultra Clean Holdings, Inc.
Ultra Clean Holdings, Inc. is a leading developer and supplier
of critical subsystems, ultra-high purity cleaning and analytical
services primarily for the semiconductor industry. Ultra Clean
offers its customers an integrated outsourced solution for major
subassemblies, improved design-to-delivery cycle times, design for
manufacturability, prototyping and component manufacturing, and
tool chamber parts cleaning and coating, as well as
micro-contamination analytical services. Ultra Clean is
headquartered in Hayward,
California.
About Ham-Let (Israel-Canada) Ltd.
Ham-Let Group is one of the world's leading companies in
development, manufacturing, and distribution of industrial flow
control systems – connectors, fittings and valves for high pressure
and high temperatures transmission systems (gases and liquids).
Founded in 1950, Ham-Let Group serves customers in a wide range of
segments: semiconductor, power generation, chemical, oil & gas,
petrochemical, high purity, and more. Ham-Let factories are
equipped with the latest manufacturing and inspection technologies
enabling precise solutions for industry opportunities, and
encouraging innovation for the creation of new, advanced components
and systems. Ham-let has a strong global presence with 14 branches,
5 manufacturing sites and a worldwide distribution network.
Use of Non-GAAP Measures
In addition to providing results that are determined in
accordance with Generally Accepted Accounting Principles in
the United States of America
(GAAP), management uses non-GAAP gross margin, non-GAAP operating
margin and non-GAAP net income to evaluate the Company's operating
and financial results. We believe the presentation of non-GAAP
results is useful to investors for analyzing our core business and
business trends and comparing performance to prior periods, along
with enhancing investors' ability to view the Company's results
from management's perspective. The presentation of this additional
information should not be considered a substitute for results
prepared in accordance with GAAP. The Company currently defines
non-GAAP net income as net income (loss) before amortization of
intangible assets, restructuring charges, executive transition
costs, acquisition costs, fair value adjustments, depreciation
adjustments, stock-based compensation, and the tax effects of the
foregoing adjustments. A table showing GAAP to non-GAAP
reconciliation can be found at the end of this press release.
This release and the accompanying tables include a discussion of
Adjusted EBITDA, which is a non-GAAP financial measure that is
provided as a complement to results provided in accordance with
accounting principles generally accepted in the United States of America ("GAAP").
"Adjusted EBITDA" is defined as net income (loss) plus provision
for (benefit from) taxes, interest expense, other expense (income),
depreciation expense, amortization expense, stock-based
compensation expense, and other infrequent or unusual items. The
definition of Adjusted EBITDA used in this press release may not be
comparable to the definitions as reported by other companies. We
believe Adjusted EBITDA is relevant and useful information because
it provides investors with additional measurements to analyze past
operating performance and enterprise value. A reconciliation of
Adjusted EBITDA to net income is provided in the accompanying
table.
Safe Harbor Statement
This press release contains, or may be deemed to contain,
"forward-looking statements" (as defined in the US Private
Securities Litigation Reform Act of 1995) which reflect our current
views with respect to future events and financial performance. We
use words such as "anticipates," "projection," "outlook,"
"forecast," "believes," "plan," "expect," "future," "intends,"
"may," "will," "estimates," "see," "predicts," "should" and similar
expressions to identify these forward-looking statements.
Forward looking statements included in this press release
include, without limitation, statements regarding the proposed
acquisition of Ham-Let by UCT, the expected timetable for
completing the transaction, and benefits of the transaction and
future opportunities for the combined company. Forward-looking
statements are subject to known and unknown risks and uncertainties
that could cause actual results to differ materially from those
expressed or implied by such statements. There are a number of
important factors that could cause actual results or events to
differ materially from those indicated by such forward-looking
statements, including: (1) the ability to consummate the
transaction and/or the financing for the transaction, (2) the
financing used to consummate the transaction, (3) risks that the
conditions to the closing of the transaction or the financing of
the transaction are not satisfied, including the risk that required
approvals for the transaction from governmental authorities are not
obtained; (4) the ability of UCT to successfully integrate
Ham-Let's operations and employees; (5) unexpected costs, charges
or expenses resulting from the transaction; (6) UCT's ability to
successfully grow its or Ham-Let's business; (7) potential adverse
reactions or changes to business relationships resulting from the
announcement or completion of the transaction; (8) the retention of
key employees, customers or suppliers; and (9) legislative,
regulatory and economic developments, including changing business
conditions in the semiconductor industry markets overall and the
economy in general as well. These risks and other factors also
include, among others, those identified in "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations'' and elsewhere in UCT's Form 10-K, Forms
10-Q and other reports and statements filed with the Securities and
Exchange Commission. Forward-looking statements are made and based
on information available to the company on the date of this press
release. The company assumes no obligation to update the
information in this press release.
GAAP - Non-GAAP
Reconciliation
|
|
|
|
|
|
|
|
($ in
million)
|
UCT
|
|
Ham-Let
|
|
Combined
|
|
|
LTM
|
% of Sales
|
LTM
|
% of Sales
|
LTM
|
% of Sales
|
Revenue
|
$1,315
|
100.0%
|
$201
|
100.0%
|
$1,517
|
100.0%
|
|
|
|
|
|
|
|
Gross profit
reconciliation
|
|
|
|
|
|
|
Gross profit –
GAAP
|
271
|
20.6%
|
50
|
25.1%
|
321
|
21.2%
|
Amortization of
intangible assets
|
4
|
0.3%
|
1
|
0.6%
|
5
|
0.4%
|
Restructuring
charges
|
1
|
0.1%
|
-
|
-
|
1
|
0.1%
|
Stock-based
compensation expense
|
2
|
0.2%
|
0
|
0.1%
|
2
|
0.2%
|
Gross profit –
Non-GAAP
|
$278
|
21.1%
|
$52
|
25.8%
|
$329
|
21.7%
|
|
|
|
|
|
|
|
Operating income
reconciliation
|
|
|
|
|
|
|
Operating income –
GAAP
|
93
|
7.0%
|
13
|
6.5%
|
106
|
7.0%
|
Amortization of
intangible assets
|
20
|
1.5%
|
1
|
0.6%
|
21
|
1.4%
|
Restructuring
charges
|
17
|
1.3%
|
-
|
-
|
17
|
1.1%
|
Stock-based
compensation expense
|
13
|
1.0%
|
1
|
0.4%
|
13
|
0.9%
|
Other non-recurring
items
|
(1)
|
-0.1%
|
1
|
0.3%
|
(1)
|
0.0%
|
Operating income –
Non-GAAP
|
$141
|
10.7%
|
$16
|
7.9%
|
$157
|
10.3%
|
|
|
|
|
|
|
|
Adjusted EBITDA
reconciliation
|
|
|
|
|
|
|
Net income -
GAAP
|
48
|
3.7%
|
8
|
4.1%
|
56
|
3.7%
|
Provision for
taxes
|
17
|
1.3%
|
1
|
0.5%
|
18
|
1.2%
|
Interest and other
expense, net
|
28
|
2.1%
|
4
|
1.9%
|
32
|
2.1%
|
Depreciation
|
27
|
2.0%
|
8
|
3.9%
|
35
|
2.3%
|
Amortization of
intangible assets
|
20
|
1.5%
|
1
|
0.6%
|
21
|
1.4%
|
Restructuring
charges
|
17
|
1.3%
|
-
|
-
|
17
|
1.1%
|
Stock-based
compensation expense
|
13
|
1.0%
|
1
|
0.4%
|
13
|
0.9%
|
Other non-recurring
items
|
(1)
|
-0.1%
|
1
|
0.4%
|
(0)
|
0.0%
|
Adjusted
EBITDA
|
$168
|
12.8%
|
$24
|
11.8%
|
$192
|
12.6%
|
|
|
|
0
|
|
|
|
LTM reflects
unaudited results for the last twelve months ended Sept 25, 2020
for UCT and Sept 30, 2020 for Ham-Let
|
Subject to
rounding
|
|
|
|
|
|
|
Source: Company
filings
|
|
|
|
|
|
|
Contact:
Rhonda Bennetto
Investor Relations
(250) 370-9030
rbennetto@uct.com
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SOURCE Ultra Clean Holdings, Inc.