II-VI to Buy Pacific Rare Specialty

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II-VI Inc., a Saxonburg, Pa.-based maker of crystalline compounds, announced today that one of its subsidiaries will acquire Pacific Rare Specialty Metals & Chemicals Inc., in exchange for cash. Financial terms were not disclosed.

The transaction is expected to close in II-VI's first fiscal quarter, ending Sept. 30. II-VI said it will update its guidance for the fiscal year ending June 30, 2008, when the acquisition is completed, and that it is expected to be immediately accretive.

Philippine-based PRSMC is a producer and refiner of selenium and tellurium metals and chemicals as well as other rare metals and components for electronic, industrial and other applications. It reportedly had revenues of approximately $13.6 million for the year ending on Dec. 31, 2006.

II-VI said it expects the acquisition "to have an immediate positive contribution to revenues and earnings" and that it will enable it to expand and secure its supply of selenium and tellurium products. Selenium is a  raw material used in the production of zinc selenide, the most commonly used substrate for CO2 laser optics manufactured and sold through II-VI's Infrared Optics business segment. Tellurium is a  raw material used to produce bismuth telluride for thermoelectric coolers manufactured and sold by Marlow Industries Inc., part of II-VI's Compound Semiconductor Group business segment. PRSMC will become an operating unit reporting to Jim Martinelli, vice president of II-VI's government and military business.

Francis J. Kramer, president of II-VI, said, "For the past few years, the volatility of the cost and the available supply of selenium for our infrared optics business has been a concern. Although this acquisition does not eliminate the selenium price volatility, it does improve the certainty of supply. The PRSMC tellurium production will also benefit our thermoelectric cooler cost structure and supply chain."

II-VI's products are used in industrial manufacturing, military and aerospace, medical radiology, high- power electronics and telecommunications, and thermoelectronics applications. It produces crystalline compounds including zinc selenide for infrared laser optics, cadmium zinc telluride for gamma-radiation detectors, silicon carbide for high-power electronic and microwave applications, and bismuth telluride for thermoelectric coolers.
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Published: May 2007
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