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Sunday, Jan 29, 2023

Mobix Labs To Go Public, $300M Valuation

M&A pipeline key part of upstart's strategy

Irvine-based chip startup Mobix Labs Inc. plans to pursue a robust acquisition strategy following a planned public listing that values the company at nearly $300 million.

Mobix, which focuses on next-generation 5G wireless communications and optical cable offerings, said last month it intends to merge with blank check firm Chavant Capital Acquisition Corp. (Nasdaq: CLAY), a special purpose acquisition company—commonly known as a SPAC—that raised about $80 million in mid-2021.

The reverse merger is expected to be completed in the first half of next year. Mobix said it will trade the Nasdaq stock exchange, though a ticker symbol hasn’t been announced.

Mobix said it expects to have a pro-forma equity value of $295 million, with its stock priced at $10 per share.

It’s a quick move to the public markets for Mobix, which was founded in 2020 and came out of stealth mode just last year.

The company said in September it had raised approximately $31 million in financing. It has announced a handful of acquisitions, including this year’s buy of another Irvine firm involved in the area’s vital semiconductor sector, optical cable tech firm Cosemi Technologies Inc.

The Mobix Labs strategy since its founding is to pursue a twin-track growth approach of organic growth and acquisitions.

Fundraising Plans

In addition to adding the $80 million that Chavant Capital already raised to its balance sheet, Mobix plans to complete an additional $30 million private placement at the time it goes public, in addition to getting a $100 million equity line of credit. Mobix is also working on seeking “other financing” in conjunction with its SPAC partner, it said.

Proceeds from those funding deals will be used “for ongoing chipset development to capitalize on the large and rapidly expanding global demand for improved communication systems performance,” it said.

Funds will also be put toward more M&A deals, as the company seeks to “accelerate growth through acquisition of cash flow-generating companies with complementary products, customer mix and industry verticals.”

Peterson Playbook

A robust acquisition strategy is second nature to the company’s Executive Chairman, James “Jimmy P” Peterson.

While helming Aliso Viejo chipmaker Microsemi Corp., Peterson—one of the better-known tech execs in Orange County, and a prominent figure in philanthropic circles—oversaw nearly 30 separate acquisitions and divestitures, prior to its own 2019 sale, for $10.3 billion, to Arizona-based chip rival Microchip Technology Inc. Peterson left the company shortly after that deal closed.

At the time of the sale to Microchip, Microsemi was approaching $2 billion in annual sales. Mobix hasn’t disclosed its own revenue yet, but says that the market for its 5G wireless and optical cables products was more than $155 billion in 2022 and growing rapidly.

Mobix describes itself as a fabless semiconductor company 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, infrastructure and defense.

Irvine will remain the company’s headquarters while the current management team will stay in place, it said.

Hiring Plans

“We’re anticipating that we’re going to be growing headcount here in Irvine going forward,” Mobix CEO Fabian Battaglia told the Business Journal.

Mobix Labs had just under 50 employees in Irvine as of last month.

Headcount in 2023 will be dependent on what the company will be able to add via acquisitions.

“We have four or five entities that we are looking at right now, as part of our M&A strategy,” Battaglia said. “It will be dependent on how many of those, and which of those, we would close during 2023.

“Our partnership with Chavant helps fund Mobix Labs’ organic growth plans and enables us to continue to successfully make accretive acquisitions,” Battaglia said.

Mobix’s latest purchase was announced in October, when it agreed to acquire EMI Solutions, its third acquisition since its 2020 founding. Terms of the company’s three buys haven’t been disclosed.

SPAC Moves

SPACs, the method being used by Mobix Labs Inc. to go public, are blank check companies that raise money from public market investors and then merge with a private operating company, to provide the private business with a cash infusion and a track to becoming a public company.

The popularity of SPACs has waxed and waned in recent years. Several OC firms have used the SPAC vehicle to go public in the past few years, and nearly all are trading below their initial $10 offering price. Many are well off the $10 per share benchmark.

Automobile tech company Indie Semiconductor Inc. (Nasdaq: INDI) went public via a SPAC in June 2021, and raised nearly $400 million in proceeds from the reverse merger and a concurrent $150 million financing deal.

Indie’s shares were trading around $8 last week. Despite the stock decline it’s still one of the better-performing SPAC deals seen in OC, based on share price. The firm, which aims to reach profitability next year, has a market cap of about $1.2 billion.

—Kevin Costelloe


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Kevin Costelloe
Kevin Costelloe
Tech reporter at Orange County Business Journal

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