Publicly listed Swedish firm Mycronic AB has reached a deal to buy 75 per cent of Shenzhen Axxon Automation Co.,Ltd (Axxon) for a cash consideration of approximately SEK 430 million ($50.5 million) funded through internal resources. The deal will be finalised in September 2016, following regulatory approval.
With approximately 240 employees, Shenzhen-based Axxon, incepted in 2008 develops, manufactures and sells dispensing equipment for the electronics industry. Its devices are applied in processes of sealing dispensing, conformal coating, potting, precise jet, and under-fill in high-level manufacturing. Its applications range from household appliances to medical equipment.
China represents approximately 40 percent of the global dispensing market, with a market capitalisation that is projected to reach $40.5 billion by 2020 and growing at a CAGR of 5.1 per cent from 2015 to 2020.
As part of the agreement Mycronic will acquire the remaining shares of the company in two steps – an additional 5 per cent will be acquired within this year and the last 20 per cent after three years.
The purchase price for the last part after three years will be set based on parameters such as growth and earnings, which may include changes compared to the current valuation. The rationale for this acquisition was Axxon’s market and technology position, combined with Mycronic’s market position and technology.
Speaking on the development, Chen Long, Chairman of Axxon, said: “Axxon is very pleased to join Mycronic, we admire Mycronic’s advanced technology. Axxon has enjoyed rapid growth in recent years, and has become a leader in the dispensing equipment industry in China with a high-value customer base in the smart phone and other mobile devices industry.
“It has a market driven, talented management team and solid technical strength. I believe that under the leadership of Mycronic, Axxon will soon become a global leading brand of dispensing equipment,” Chen continued.
According to a media release, Axxons’ strategy is focused on developing mainstream products, combined with fast response time to customer and market requirements. The company reported 2015 net sales increasing over 100 per cent to approximately SEK 150 million ($17.6 million), with an EBIT margin exceeding 20 per cent.
Mycronic’s own growth strategy for growing this company includes both organic growth as well as acquisitions to reach sustainable net sales in excess of SEK 2 billion ($234.7 million), with this acquisitive transaction reflecting this growth strategy.
A key strategy for Mycronic’s business area in Surface-mount technology (SMT) – a method for producing electronic circuits in which the components are mounted or placed directly onto the surface of printed circuit boards (PCBs) – is to leverage the company’s position in solder paste jetting technology and to further expand into the general dispensing market.
Lena Olving, President and CEO of Mycronic, said, “With the acquisition of Axxon we are taking the next step in our strategy for our SMT business. Overnight we are creating a leading dispensing business globally.”
“Axxon’s technology is complimentary to ours. We see great value in Axxon’s market position in the important SMT market in China, but we also see value in the know-how represented by the people in Axxon,” Olving added.
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Shiwen Yap shiwenyap
shiwen@dealstreetasia.com