ASSET: RAK: Rakon expands European business

22 Jul 2010 11:10 am

RAK 22/07/2010 ASSET

REL: 1110 HRS Rakon Limited

ASSET: RAK: Rakon expands European business

Rakon Limited (NZX: RAK) is pleased to announce another important step in its ongoing building of a profitable growing Global Business.

Rakon's European business will acquire the assets of French based competitor Temex for Euro 400k in a move that will provide significant acceleration for Rakon's growth in the High Performance, High Reliability sectors, plus add considerable IP and management depth to the European based teams.

"Temex is a 30+ year old business with exceptional technology and a blue chip customer base which complements our existing European operations. This acquisition will broaden our business and base of people, as well as introduce new IP, customers and open new markets for us," explained Brent Robinson, Rakon's CEO. "Temex has excellent synergies with our existing operations in France and the acquisition will significantly accelerate our plans to develop the high performance OCXO markets in space, aviation, under-sea telecommunications, mining exploration and defence which have excellent potential for Rakon."

"With Temex we gain penetration into some exciting applications, such as the Galileo navigation satellites and transportation vehicles for the International Space Station, as well as various aviation programs. The volumes in these may not be large in themselves but the value is very high and enables us to further develop cutting edge technology which can then be applied to higher volume markets," said Mr Robinson.

Mr Robinson says the price is a significant discount to book value and reflective of the need to invest time and new expertise into bringing Temex up to Rakon's exacting technical standards. The purchase will be funded out of existing operating budgets.

"Initially the French operations we acquired back in 2007 were predominantly focussed on the highly cost competitive telecommunications sector and to a lesser extent the demanding but high value space and aerospace markets. Since then we have successfully moved the high volume, lower margin telecommunications products to our low production cost joint venture in India. This Temex acquisition accelerates our planned expansion in France into higher margin, very high performance applications," explained Mr Robinson.

"Rakon's existing presence and focus in France means we will be able to quickly integrate the Temex business and people into our overall operations and gain synergies in both operations. Based upon Temex's existing revenue of Euro 11 million per annum we expect the aggregated business will begin to deliver modest returns in the near future and steadily grow over time as improvements are made." The transfer of assets is expected to occur in mid August 2010.

Background: RAKON, Rakon is a world leader in the design and manufacture of a broad range of frequency control solutions for high performance and high volume markets. Headquartered in Auckland, New Zealand, Rakon is a global company with manufacturing facilities in New Zealand, Europe, India and China. Rakon is the world leader in the supply of crystal oscillators to the GPS market and is also a leader in the supply to the telecommunications and aerospace markets. TEMEX, with more than 30 years of expertise in designing and manufacturing high-performance and high-precision frequency products, is known worldwide in the area of high precision and high reliability frequency solutions. Their products are designed to operate in extremely demanding environmental conditions. OCXO: Oven Controlled Crystal Oscillator. An electronic component used for producing a very stable frequency. Typically performance is up to 1000 times more stable than lower cost TCXOs and can approach the stabilities offered by highly expensive atomic clocks. End CA:00197509 For:RAK Type:ASSET Time:2010-07-22:11:10:10

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