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Ichor Set to Acquire IMG for $270M

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Engineering and manufacturing company Ichor Holdings, Ltd. (Nasdaq: ICHR) is set to acquire IMG Companies, LLC for $270 million via Ichor’s subsidiary Incline Merger Sub LLC. in a deal that will expand Ichor’s capabilities and customer base.

According to the press release, Ichor is “a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment” and IMG is a “precision machining, welding, brazing, and surface treatment business serving the semiconductor, medical, and aerospace/defense industries.”

The $270 million deal, announced Nov. 16, will comprise approximately $140 million cash and on-hand marketable securities as well as $130 million of incremental borrowing.

“IMG brings to Ichor additional precision machining capabilities and capacity, as well as advanced manufacturing capabilities such as e-beam and laser welding, precision vacuum and hydrogen brazing, ceramic metallization, and precious metal coating capability,” Jeff Andreson, CEO of Ichor, said in a press release. “While IMGs primary market is the semiconductor equipment industry, this acquisition will also expand Ichor’s customer base, with positions in rapidly-growing segments of the medical, aerospace and defense industries.”

The deal is expected to be accretive to Ichor’s operating model. According to the filing, the transaction is expected to add “at least 100 basis points to gross margin, and at least 40 basis points to operating margin, on a non-GAAP basis” for the full year for 2022. Furthermore, IMG is expected to give $70-80 million of incremental revenue on a yearly basis and $20-22 million of non-GAAP adjusted EBITDA.

The transaction is subject to customary closing conditions and is anticipated to close in Q4 of this year.

Ichor is represented by Kirkland & Ellis LLP and its financial advisor is Cowen & Company LLC. IMG is represented by Akerman LLP and Stearns Weaver Miller Weissler Alhadeff & Sitterson.

Before the announcement, Ichor’s stock was valued at $48.56 on November 15, on November 16 when it was announced, stock was $49.41, the next day it was valued at $48.86, and more than a week later on November 29, stock was valued at $48.53. The company’s stock has been relatively consistent in light of the announcement.

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