Millipore to buy Tylan

Electronic News, Dec 23, 1996 by Judy Erkanat

Bedford, Mass.--In what looks like the third largest semiconductor equipment company acquisition of 1996, Millipore Corp. put pen to a definitive agreement to acquire Tylan General. The deal is for $16 per share in cash, or $133 million, plus Millipore's assumption of Tylan's outstanding combined long-term and short-term debt of $22 million, putting the indicated value of the deal at $155 million.

Tylan's reported 1996 sales of approximately $150 million puts the deal at 1x its annual revenues, with completion of the transaction expected in 1Q97.

"I am very enthusiastic about this transaction and the prospects offered by a combination of our business with that of Millipore," said David J. Ferran, Tylan's chairman and CEO. "This transaction will be beneficial for Tylan General's employees, customers and suppliers, as well as for its stockholders."

Just last summer, Mr. Ferran rebuffed another apparent buyout attempt (EN, July 1), quickly closed an acquisition of another company and detailed plans to buy out Tylan himself (EN, Aug. 26).

After hastening its $16 million acquisition of Span Instruments, Mr. Ferran said he and Don Whitson were pooling their interests as contenders to purchase Tylan. The Span deal was accelerated by Danaher Corp.'s unexpected and unwelcome purchase of a 10.4 percent interest in Tylan, believed to be a buyout ploy.

In the midst of the Millipore acquisition, Tylan General announced its financial results for the fourth quarter and fiscal year ended Oct. 27. Revenues for 4Q96 were $33.6 million, compared with $35.2 million in 4Q95, and with $39.3 million in 3Q96. Operating profit was $573,000 in the fourth quarter, as compared to an operating profit of $2.9 million in the same period of the prior year and an operating loss of $1.6 million in 3Q96.

The company incurred a net loss for 4Q96 of $193,000. This compares with net income of $1.5 million, or $0.21 per share, for 4Q95, and with a net loss of $1.7 million in 3Q96. Revenues for fiscal 1996 were $148.3 million, compared with $118.3 million for 1995. Operating income for fiscal 1996 was $4.1 million, compared with operating income of $11.8 million in the prior year. Net income for fiscal 1996 was $571,000, or $0.07 per share. Net income for fiscal 1995 was $5.2 million, or $0.80 per share.

Millipore was pleased with its new addition.

"The acquisition of Tylan General significantly strengthens Millipore's competitive position in microelectronics, the company's fastest-growing market over the past three years," said C. William Zadel, Millipore's chairman and CEO. "It expands our product and service offering to our microelectronics customers, accelerates our R&D program in gas monitoring and adds excellent software and electronics skills to our core competencies. The acquisition also combines two breakthrough technology platforms: Tylan's intelligent gas panels and Millipore's smart purifiers, which will allow us to develop integrated products for the gas market that offer greater reliability and lower cost."

Mr. Zadel felt the acquisition and Millipore's recent purchase of Amicon fit into his company's long-range strategic plan.

"Biotechnology-derived drugs and increasingly powerful semiconductor devices require new purification tools for discovery and manufacturing; these acquisitions help us meet that technical and market need," he concluded.

Arthur C. Spinner is chairman of the special committee of the board of directors of Tylan General that supervised the process of soliciting bids for the acquisition of Tylan General. "This transaction represents the culmination of an extensive auction process that we believed was designed to provide the best financial opportunity for the stockholders of Tylan General," he said.

Millipore, a multinational purification technology company, intends to finance the Tylan acquisition with bank borrowings. It expects the acquisition to be accretive to earnings by the second half of 1997 and to significantly enhance the long-term growth of its revenues and profits. Millipore will shortly commence a tender offer at $16 per share for all the shares of Tylan General, subject to the condition that a majority of the shares are tendered. The tender offer, if successful, will be followed as promptly as possible by a merger in which any remaining shares of Tylan General stock will be converted into the right to receive $16 per share in cash.

San Diego-based Tylan General supplies precision mass flow controllers, pressure and vacuum measurement and control equipment, and ultraclean gas panels to the microelectronics industry.