Chip startup Mobix Labs Inc., led by seasoned industry veterans, including James “Jimmy P” Peterson, is bidding $34.4 million for aerospace and defense supplier Emcore Corp.
The Irvine-based company said Sept. 30 it has submitted an offer to acquire the Budd Lake, New Jersey-based company for $3.80 per share in cash (Nasdaq: EMKR).
The offer represents a more than 200% premium over Emcore’s stock price on Sept. 27. Emcore acknowledged receipt of the offer and said it is evaluating the bid.
The stock market reaction suggests that investors aren’t convinced yet that the deal will happen. including the fact that Mobix’s balance sheet showed only$205,000 in cash as of June 30.
While Emcore shares more than doubled to $2.37 on Oct. 2 and a $21.5 million market cap, they remain substantially below the offering price.
The potential deal will offer Mobix a chance to jumpstart its revenue – Emcore reported revenue in its fiscal year ending Sept. 30, 2023, grew 115% to $97 million.
It also signals a familiar playbook for Mobix Executive Chairman Peterson, who built Microsemi Corp. through a series of acquisitions until it was sold to Microchip Technology Inc. for $10.3 billion in 2018 (Nasdaq: MCHP).
Another well-known business leader at Mobix is David Aldrich, former CEO and chairman of Skyworks Solutions.
Emcore is the world’s largest independent provider of inertial navigation solutions to the aero-space and defense industry, according to Mobix Labs.
“We believe this proposal presents an exceptional opportunity for Emcore shareholders to realize immediate and significant value for their investment,” Mobix Labs Chief Executive Fabian Battaglia said in a statement.
“We believe integrating Emcore’s products would further accelerate our growth and innovation in critical markets.”
Following the offer, Mobix shares remained near $1 and a $31.5 million market cap; they are down from $11.05 just 12 months earlier (Nasdaq: MOBX).
Mobix Financing Unclear
Mobix, founded in 2020, describes itself as delivering “disruptive next-generation wireless and connected solutions” for a broad range of applications in markets including 5G infrastructure, automotive, consumer electronics, e-mobility, healthcare and defense.
It remains unclear where Mobix will get the cash for the deal. The company has previously signaled money troubles.
“We cannot assure you that we will achieve or maintain profitability and our auditor has expressed substantial doubt about our ability to continue as a going concern,” the company told the SEC on Aug. 29.
Asked by the Business Journal about the potential cash crunch, President and Chief Financial Officer Keyvan Samini declined to disclose more information.
“Unfortunately, I cannot get into any additional details about our proposed offer, other than what has been publicly dis-closed,” Samini said.
Mobix said its other recent strategic acquisitions, including EMI Solutions and RaGE Systems, “have significantly strengthened the company’s position” in the military, defense and high-reliability electronics sector,
The potential acquisition will boost revenue at Mobix. In its most recent fiscal third quarter, it reported sales climbed 80% sequentially to $2.1 million while its operating adjusted loss was $4.1 million. It’s expecting fiscal fourth quarter revenue be-tween $2.6 million to $3.2 million.
Emcore itself is having its own problems. On Aug. 6, it reported fiscal third-quarter revenue fell 24% to $20.4 million while its net loss from continuing operations in-creased almost fivefold to $14.5 million.
Three analysts who follow the company expect sales to decline 14% to $84.2 million this fiscal year.
Its cash and cash equivalents have fallen 68% in the past nine months to $8.5 million as of June 30.
Emcore effected a one-for-10 reverse share split in April. The shares are down about 66% from a 52-week high of $7.20 in February.
