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Johnson Matthey to acquire Advance - Advance Circuits

MINNEAPOLIS -- Johnson Matthey signed a definitive agreement to acquire Advance Circuits, a supplier of multilayer printed circuit boards, flexible circuit assemblies, semiconductor packaging and manufacturing services based near here. U.K.-based Johnson Matthey will make a cash tender offer of $22.50 a share for all outstanding shares of Advance common stock, an offer worth about $171 million.

The deal, approved by the boards of each company, still requires regulatory approval and meeting other conditions.

For the nine months ended May 27, Advance had net income of $7.2 million (98 cents per share) on revenues of $127.8 million. However, earnings for the fourth quarter ending Aug. 26 are expected by Advance Circuits to be "substantially less than...earnings for the third quarter," the companies noted last week.

David Davies, chairman/CEO of Johnson Matthey, said Advance would fit in well with his company's Electronic Materials business. The acquisition will "greatly expand the product range" of the business, "particularly in the key emerging market of plastic laminate packaging. Johnson Matthey is committed to investing in superior technology and to serving our customers in markets worldwide. The acquisition of Advance Circuits further underlines this commitment."

London-headquartered Johnson Matthey plc's Electronic Materials business has a U.S. operation in Spokane, Wash. A company spokesman in the U.K. said there is no intention to relocate any Advance Circuits facilities.

At Minnetonka, Minn.-based Advance Circuits, Robert Heller, chairman/CEO, said: "I am especially pleased with the merger because of Advance Circuits' enhanced ability to execute its global and semiconductor packaging strategies."

Dillon, Read & Co., Inc. and Baring Brothers Ltd. are acting as financial advisors for Johnson Matthey, with Dillon Read acting as dealer manager for the offer. Alex Brown & Sons has rendered a fairness opinion for Advance Circuits. The common stock of Advance Circuits is traded in the over-the-counter market and prices are quoted on the Nasdaq National Market under the symbol ADVC.

Under the definitive merger agreement signed by the two companies, an indirect, wholly-owned U.S. subsidiary of Johnson Matthey will be merged into Advance Circuits. In connection with the merger, Johnson Matthey intends shortly to commence the cash tender offer for all the outstanding shares of common stock of Advance Circuits at $22.50 per share. Based upon 7.6 million Advance Circuits common shares currently outstanding, the aggregate consideration to be paid in the tender offer and the merger, including payment in respect of outstanding stock options, will amount to approximately $171 million.

The acquisition is not subject to a financing condition but is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act and to certain other conditions.