Investcorp Carves Out $17M K&S Package

Target: Antares conTech (f.k.a. the semiconductor package test business of Kulicke & Soffa).

Buyer: Investcorp Technology Ventures

Seller: Kulicke & Soffa (Nasdaq: KLIC).

Price: $17 million, all cash

Financial advisor: Seller: Houlihan Lockey Howard & Zukin

Legal counsel: Gibson, Dunn & Crutcher for buyer; Drinker Biddle & Reath for seller.

It’s time to consolidate and according to Investcorp Technology Ventures, there are good opportunities for consolidation in the semiconductor industry. The New York-based private equity firm is putting its money where its mouth is with its recently closed $17 million purchase of the semiconductor package test business of West Grove, Pa.-based Kulicke & Soffa (Nasdaq: KLIC).its money where its mouth is with its recently closed $17 million purchase of the semiconductor package test business of West Grove, Pa.-based Kulicke & Soffa (Nasdaq: KLIC).

The former Kulicke & Soffa business is now operating under the name Antares conTech and is headquartered in Gilbert, Ariz. with a new manufacturing facility in Suzhou, China. The acquisition was made with $17 million in cash and Investcorp says it has invested an additional, undisclosed amount of capital into the company to be used for growth acquisitions and working capital. The deal was made through the firm’s Investcorp Technology Ventures Fund II.

The semiconductor test package business that became Antares conTech started as part of a single business that was eventually split in two. Kulicke & Soffa sold its wafer test business to SV Probe for $10 million. Initially SV Probe was a bidder for both parts of the $90 million combined business.

Alex Guira, a managing director with Investcorp who oversaw the deal, says that the business is a profitable one poised to be an ideal platform for consolidation in the semiconductor package test business. Guira says that Investcorp is already looking to build on its acquisition and is in serious discussions with two semiconductor companies right now and expects to close on at least one deal by June. “The market is really ripe for consolidation,” he says. “There are a lot of mom and pops out there and we have the platform to really be the consolidator in the marketplace.”

The business on its own has been consistently profitable and only took a loss last year due to its investment in a new facility in China and its adoption of a newly released Quatrix test socket. Investcorp expects the company to do more than $35 million in revenue this year with about $6 million EBITDA. He says that the new facility increases the company’s market opportunity from $200 million a year to $400 million a year.

The deal fits Investcorp’s corporate spinout strategy in that it can achieve 15% to 30% growth. Guira says that as far as exit strategies go, it is likely that the large technology companies of Asia and North America would provide the best exit strategy via a strategic acquisition. “All the various options are open to us,” says Guira. “There are some interesting large corporates in this marketplace and there’s significant opportunity there. If the business grows like we think it can grow and we can continue to become a leader, then the public markets are a potential.” But he says for now his focus will be on building on the new company’s platform. “If you just build a good business and focus on that, then the exits will take care of themselves.”

New York and London-based Investcorp was founded in 1982 and has more than $9 billion in assets under management. It focuses on buyouts, corporate spinout and growth capital financing transactions between $10 million and $25 million in technology companies in North America and Europe. It also makes venture, real estate and hedge fund investments and its private equity funds are joint buyout and venture capital funds. —M.S.