Cirtek ‘plants PH flag’ in Silicon Valley with $77M Quintel buyout

Cirtek’s manufacturing hub in Laguna
(photo: www.cirtekholdings.com)

Laguna-based Cirtek Holdings Philippines Corp. has moved up the electronics manufacturing value chain with a $77-million deal to acquire US-based Quintel, a leading supplier of antenna solutions to North America’s telecom carriers.

With the consolidation of Quintel into Cirtek’s books in the last five months of this year, the deal is seen to add $20 million in revenues this 2017 and over $100 million in 2018, Cirtek chief finance officer Anthony Buyawe said in a press briefing on Monday.

“We’re planting the Philippine flag in Silicon Valley with this acquisition,” Citek vice chair and president Roberto Juanchito Dispo said. “We will do a vertical integration to bring the manufacturing talent of Filipinos to manufacture these antennas more efficiently.”

Cirtek is also pumping in $30 million in additional working capital to boost Quintel’s capacity, Dispo said.

While already strong in the US with a market share of 15 percent, Dispo said Quintel was now breaking into Latin America with Puerto Rico as its gateway. The existing marketing office in the UK will likewise be used as a jumping board to promote and market products to Europe.

“It’s not farfetched that we will market this in Asia as well,” Dispo said.

To meet Quintel’s targeted revenue contribution, the company is expected to produce 38,000 units next year from 20,000 to 22,000 units this year.

The acquisition is in line with the vision of catapulting Cirtek to be a world-class high-tech company, Cirtek chair Jerry Liu said.

“Combined with Quintel’s rich intellectual property, strong R&D (research and development) and superior product offering, together with Cirtek’s manufacturing excellence plus our millimeter wave business, this leading technology in the radio frequency products, we can create a strong force in the market which we can grow the business,” Liu said.

“We’re very proud to be a Filipino company that can enter the global market,” Liu said.

A definitive agreement has been signed between Cirtek and Trillium International I, GP, as shareholder representative of Quintel Cayman Ltd. for the former to acquire 100 percent of Quintel.
Trillium – a Rochester, New York-based private equity firm managing early stage venture capital and growth equity funds – had been a shareholder of Quintel since 2007.

The valuation of $77 million for 100 percent of Quintel was based on the discounted cash flow and multiples derived from comparative deals. The deal was priced at 6-7 times projected 2017 earnings before interest, taxes, depreciation and amortization. This is a very reasonable valuation, Buyawe said.

Upon its closing yesterday, the transaction gave Cirtek a significant presence in the large and rapidly growing base station antenna market, estimated to be more than $14 billion by 2020.

Quintel is a leading innovator of spectrum and space-efficient base station antennas for wireless networks. Among Quintel’s major customers include two of the top five telecom carriers in North America.

“We are pleased that Quintel has achieved another milestone, becoming a major component of a large technology company with world-wide scope. Quintel has built a major business in North America, and through work with the Cirtek team will provide increasing innovation and valuable products world-wide, while making a positive impact on the regional economies in Rochester New York and San Jose California”, said Jose Coronas and Jim Stoffel, general partners of Trillium International.

“Quintel is extremely pleased to be part of the Cirtek team which immediately provides us with the horizontal growth opportunities as well as vertical integration with a highly capable manufacturing group to enhance our current product portfolio and improve our overall efficiencies,” said David Piazza, Quintel’s president.

Credit Suisse served as exclusive financial advisor to Cirtek and Livnah Associates was legal advisor to this transaction. Stifel served as exclusive financial advisor to Trillium International Funds and Quintel, and Nixon Peabody was its legal advisor.