) recently announced that it has signed an agreement to acquire
MicroProbe, Inc., a subsidiary of Astria Semiconductor Holdings,
Inc. The acquisition, for which the company will be spending $100
million in cash and $16.8 million in stock, is expected to close
during the first half of its fiscal quarter ending December 29,
2012, subject to customary closing conditions.
Headquartered in California, MicroProbe is the market share leader
in the system on chips (SoC) probe card market, with a share of
approximately 20% and has been continuously increasing its market
share gains. Last year, the company posted non-GAAP EBITDA margin
of approximately 20% and annual revenues of roughly $87.3 million,
which was up 46% from the year-ago quarter.
FormFactor is already a leading supplier of memory probe cards. Its
existing SoC sales are driven by the microcontroller (MCU) market,
which is mostly used in auto and industrial sectors. The
acquisition will strengthen FormFactor's position in the SoC probe
card market, mainly used to test chips for tablets and smartphones,
where the company has been making significant investments over the
past 12-18 months.
Today, the advanced SoC probe card market is the fastest growing
portion of the entire probe card market. According to the market
research firm, VLSI Research Inc, probe card revenue is expected to
grow steadily and stay above the billion dollar mark despite severe
pricing pressure over the next five years. The firm projects that
the semiconductor probe card market will reach about $1.5 billion
Management stated that though it does not expect substantial cost
synergies from the deal, the acquisition will be immediately
accretive to the company financials, beginning from the first
quarter of 2013.
FormFactor is an original equipment manufacturer (OEM) of wafer
probe cards used by semiconductor makers to test integrated
circuits. In the last-reported second quarter of 2012, the company
delivered revenues of $54.8 billion, up 57.5% sequentially and
17.7% year over year. GAAP net loss was $4.2 million compared with
a loss of $7.7 million in the year-ago quarter.
FormFactor has customer and market concentration that increases
execution risks. Increasing competition from
Cascade Microtech Inc.
) is also a matter of concern.
Currently, the shares of FormFactor retain a Zacks #3 Rank
(short-term "Hold" recommendation).
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