IQE completes £7.5m acquisition of Singapore based MBE
08 January 2007


IQE plc ('IQE', 'the Group', AIM: IQE), the UK-based leading outsource supplier
of advanced wafers and outsource wafer services to the global semiconductor
industry, has completed the acquisition of MBE Technology Pte Ltd ('MBE'), a
Singapore based manufacturer of compound epitaxial ('epi') wafers for a total
cash consideration of S$23 million (£7.5 million). The conditional agreement
was announced on 22 December 2006.

This acquisition is immediately earnings enhancing and completes the Group's
strategy to become the largest supplier of epi-wafers into chip manufacturers
for the global wireless industry.

The acquisition provides IQE with a very strong presence in Asia including
excellent links into Japan, Taiwan, China and Korea. IQE intends to use the new
base in Asia to aggressively sell into the Pacific Rim wireless industry. The
enlarged Group will also have the industry's broadest range of current and next
generation products, together with enhanced purchasing power for raw materials.

The consideration is based on an initial payment of S$11.5 million (£3.8
million) in cash and a further S$11.5 million (£3.8 million) by the issue to the
vendor of loan notes bearing interest of 6.5%. The loan notes are repayable in
three instalments in January 2008, June 2008 and January 2009.

Noble & Company Limited has placed 25 million new ordinary IQE shares ('New
Ordinary Shares') at 18p per share to raise approximately £4.5 million (before
expenses) to finance the cash consideration of the acquisition and working
capital (the 'Placing'). The New Ordinary Shares were admitted to trading on AIM
on 27 December 2006.

MBE, incorporated in Singapore 1993, is one of the leading independent global
manufacturers of compound semiconductor epi-wafers for use in very high-speed
electronic components in the wireless and optical telecommunications industries.
It has state-of-the-art facilities in Singapore and a strong team of management
and employees.

In 2006, MBE is expected to generate revenues in the order of US$15 million and
an EBITDA of over US$ 3.2 million.

MBE's growth and premier position are sustained by its strong customer base
across the Far East including a strategic supplier agreement with a substantial
Japanese electronics manufacturer.

Dr Drew Nelson, IQE Chief Executive, said:

'The addition of a manufacturing and formal sales base in the Far East
significantly increases our profile in the region and establishes a truly global
presence for the Group.

'MBE has established a strong customer base across the Far East, where demand
for epi-wafers continues to see strong growth, particularly for RF/wireless
products. By being part of a larger group, MBE will have the support necessary
to exploit the regional opportunities by meeting the rapidly increasing demands
of the mobile communications sector.

'Following the successful integration of the EMD acquisition in mid 2006, I am
confident that the benefits of IQE's latest addition to the Group will quickly
add value to the whole business.'

 

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