Thursday 26th January 2017
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Phitek Systems, which supplies noise cancellation and audio enhancement equipment, has been sold to New York-listed Amphenol Corp for $60 million before adjustments.
Connecticut-based Amphenol announced the deal in a statement to the New York Stock Exchange when reporting its fourth-quarter earnings, saying the Phitek purchase was part of a broader acquisition programme, without disclosing a price. However, local filings to the Companies Office show Amphenol agreed to pay $60 million plus net cash, minus the New Zealand company's indebtedness, the levels of which have not been disclosed.
"Phitek, based in New Zealand, designs and supplies aircraft in-flight entertainment interconnect products for the commercial aerospace industry, and generates annual sales of approximately US$20 million," Amphenol chief executive R. Adam Norwitt said in a statement. "This acquisition strengthens the company’s global capabilities and enhances our product offering in this important end market."
Auckland-based Phitek reported a profit of $3.9 million in the 12 months ended March 31, 2016, up from a profit of $1.6 million a year earlier, with revenue up 32 percent to $22.6 million. The company received government grants totalling $795,824 in the 2016 financial year and $485,463 in 2015.
The New Zealand firm's subsidies from Callaghan Innovation were taken into account by Amphenol, with $2.4 million of the purchase price set aside "to satisfy future non-payment under an existing grant available to Phitek from Callaghan Innovation", the amalgamation proposal said.
The New Zealand government agency introduced clawback provisions on its research and development grants after local firm Endace was sold to overseas buyers without having to repay $11.1 million of the taxpayer funding it received.
Phitek's vendors will also have $4.3 million held in escrow to satisfy any warranty claims.
The US company will keep Phitek's New Zealand operations on a 'business as usual' basis and adopt the Phitek brand and logo.
Phitek's shareholders include Direct Capital-managed TMT Ventures, which has been invested in the audio company since 2005, with a direct 27 percent and a 14 percent holding shared with the New Zealand Venture Investment Fund, while Stephen Tindal's K1W1 investment vehicle owns 39 percent.
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