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Norsat International Inc., a provider of broadband communications solutions, announced that it has entered into a definitive agreement to acquire all the shares of Sinclair Technologies Holdings Inc., a provider of antenna and RF conditioning products, based in Aurora, Ontario. Norsat will pay US$19.25 M, subject to normal closing adjustments, and will finance the transaction with US$4.75 M from cash, US$12.0 M in debt financing from its principal banker, and 4,028,932 common shares issued from treasury. Of the purchase price, the majority will be paid upfront with the remaining portion being held in escrow and earned out over a period of two years, including the common shares. The acquisition is anticipated to close later this month.
Founded in 1951, Sinclair Technologies Inc., the operating subsidiary of Sinclair Technologies Holdings Inc., is a leading provider of antenna and RF conditioning products, systems and coverage solutions for public safety, defense and private wireless networks. Sinclair offers more than 2,000 different products including base station antennas, mobile/transit antennas, covert antennas, filters, receiver multicouplers, and accessories that are used extensively in public safety and national security communication networks, corporate and commercial communication networks, natural resource management communications systems, road, rail, air, marine and heavy transport communication systems, specialized network applications. Sinclair has industry leading expertise in all aspects of antenna and filter manufacturing. Sinclair’s systems engineers are experienced in custom designing complete systems based on the customer’s unique needs. With a strong focus on R&D and continuous product enhancements, Sinclair continues to expand its product offerings and improve existing designs to better serve its customers. Sinclair has offices in Canada, the United States and the United Kingdom and as of September 30, 2010 had approximately 100 employees.
For the fiscal year ended September 30, 2010, Sinclair had revenues of CAD$20.1 M and EBITDA1 of CAD$3.1 M compared to 2009 revenues of CAD$16.1 M and EBITDA of CAD$2.1 M. These results denote another year of continued growth from Sinclair, which has shown a string of consecutive years of increased revenue and earnings, even during the major economic malaise that has affected global markets since 2008. In the last three years the compound annual growth rate (CAGR) for revenues was 13 percent and the CAGR for EBITDA was 26 percent.
Dr. Amiee Chan, President and CEO of Norsat stated, “This is an exciting day for Norsat shareholders as this acquisition will bolster our revenue base and is expected to be immediately accretive to earnings. Sinclair has experienced rapid growth in the past several years and is expected to continue to grow, which will act as a catalyst for upside potential to this transaction. The acquisition of Sinclair is a perfect complement to our core businesses and keeps to the focal point of our mission of becoming a premier provider of broadband communications solutions for remote and austere regions. In addition, Sinclair will help diversify our markets into the commercial space and into the municipal government level. Sinclair products are being used all over the world and many are located in the harshest of environments. Many of Sinclair’s customers, like Norsat’s, have become accustomed to relying on the delivery of superior products that can withstand severe elements along with offering up the latest technologies and being able at times to provide customized solutions. In addition, we believe that combining forces with Sinclair will create opportunities such as to cross sell our customer base, resell Sinclair’s products using our Microwave division, potentially have target design antennas for our maritime and wireless divisions, and expose Sinclair’s products to our relationships in Europe and the military markets.”
Calven S. Iwata, President and CEO of Sinclair stated, “We are pleased in joining forces with Norsat which provides us with increased market penetration, especially in the military arena, as well as other synergistic capabilities like combined R&D efforts in other wireless products. This transaction is a good cultural fit as we’ll retain the Sinclair brand, which is well known in our industry. In addition, being part of the Norsat family will enable us to offer broader service and product offerings to our customers and allows us a strong internal continuity amongst our personnel. Once this transaction is closed, I am looking forward to maintaining the leadership role at Sinclair and contributing towards a smooth transition into Norsat. We are delighted to be part of the Norsat team and believe the combination of our companies will enhance the opportunities for long-term growth.”
Josef Vejvoda of Jove Capital Inc. acted as advisor for Sinclair on this transaction.