AML Bought By Competitor

When AML Communications Inc. announced last summer the hiring of an investment banking firm to handle strategic planning for the company’s future there was no mention of looking for new ownership. That is exactly what has happened in February at the Camarillo-based manufacturer of microelectronic assemblies. Anaren Inc. has purchased the company in a deal valued at $29 million and broadens the customer base of the New York-based defense contractor. Both AML and Anaren develop and manufacture microwave components and have similar records in terms of research and development and operating performance. Attempts to reach AML President and CEO Jacob Inbar were not successful. Executives with Anaren declined to comment on the acquisition as the deal was still not finalized. Combining the two companies will not be without outside scrutiny. Four law firms specializing in representing shareholders in financial litigation have started investigations that the purchase price of $2.15 per share is undervalued and that directors of AML have not acted in the best interests of the shareholders. Analysts cautioned that investigations into a merger or acquisition are not unusual and often get settled. “It has become sort of standard practice, which is unfortunate; it is a tax on the (mergers and acquisition) process,” Richard Valera, an analyst with Needham & Co. “It would be the exception if there was not one or more of these.” Attempts to reach attorneys at some of the firms doing the investigations were not successful. Once the deal is completed, the Camarillo facility will be the sixth location for Anaren and the first for the company in California. There are no major changes expected to take place and the senior management team is expected to stay on. Inbar, Tibby Mazilu, and Ed McAvoy founded the company together in 1986 and grew it by creating components used by large defense contractors such as Northrop Grumman, Raytheon and Lockheed Martin. UAV market Recent contracts received by the company are for supplying parts used in the fast growing unmanned aerial vehicle market. One such contract awarded last year was worth $3.7 million. Another for $200,000 was for microwave amplifiers used in a drone built by Northrop Grumman. AML has also supplied parts to an anti-missile program developed by Lockheed and German and Italian companies. Funding for the Medium Extended Air Defense System ends in 2013 and the program has been cancelled. AML has a wholly-owned subsidiary Cal Mimix Inc., designer and developer of semiconductor products. The company’s most recent earnings statement for the quarter ending Sept. 30 reported net income of $189,000, or $0.02 per diluted share, on revenues of $3.8 million. In comparison, Anaren posted net income of $4.7 million, or $0.32 per diluted share, on revenues of $43.4 million for the quarter ending Dec. 31. Parts supplier The company was founded in 1967 and has facilities in New York, New Hampshire, Colorado and China. It supplies parts to manufacturers of wireless infrastructure, wireless consumer products, and satellites, in addition to the defense contract work. The third generation of the company’s Xinger couplers was named as one the top products in the industry by trade publication Microwaves & RF magazine. Both Valera and Robert Maltbie, managing director of Singular Research in Calabasas, were in agreement that the deal was good for both AML and Anaren due to the complementary nature of the company’s products and that the addition of AML would boost the price of Anaren shares. There are only a limited number of prime defense contractors but many more subcontractors, so acquiring AML opens up new lines of business for Anaren. As a small business, there was a limit to how much AML could continue to grow on its own. “Often times it is entirely ambiguous whether or not a company that small can continue to increase its share and market value without doing something,” Maltbie said. In a note released the day after the acquisition was announced, Valera reiterated the buy rating for Anaren stock. The purchase price being paid by Anaren is reasonable and with the addition of power amplifiers made by AML, Anaren can expand the scope of the contracts it bids on, the note said. See related stories in Technology >