AZ Electronic Considers Acquisitions After Carlyle Exit

AZ Electronic Materials SA, a supplier of chemicals used in devices such as Apple Inc.’s iPad, is considering acquisitions following the exit of private-equity owners Carlyle Group and Vestar Capital Partners this year.

“We now have the opportunity to look at M&A that we didn’t have under private equity,” Chief Executive Officer Geoff Wild said in an interview. There are no big plans, acquisitions wise, he said.

Any consideration of takeovers would be balanced with the need to fund research and development and a progressive dividend policy, Wild said. Luxembourg-based AZ, which has a net debt to earnings ratio of 1.3 times, is also reducing borrowing after Carlyle and Vestar sold their remaining stake in March following an initial public offering in 2010.

AZ, whose materials allow smartphone and tablet PC makers to shrink electronics, is focused on $500 million markets where it can be the principal supplier and is eyeing assets as they become available, Wild said. The niche nature of the business means larger global chemical companies and engineers such as Honeywell International Inc. are less focused on competing in this field than startup companies including those in South Korea and Taiwan, Wild said.

Wild, a former Nikon and Johnson Matthey Plc executive, is considering an extra plant in China to increase capacity for materials used in liquid-crystal displays as demand for smartphones and tablet computers grows. AZ plans to switch on an additional plant in South Korea in the fourth quarter.

Debt Refinancing

The company is “watching for the right time” to refinance some of its $329.5 million in debt, Chief Financial Officer Mike Powell said. AZ doesn’t foresee problems among lenders, which include large Japanese banks, he said.

“Third-quarter revenues will be around the same levels as the second quarter,” AZ said in a statement today. That compares with the company’s previous forecast for sequential quarterly growth throughout 2012. AZ’s second-quarter sales climbed to $199.6 million from $184 million in the previous three months.

AZ shares dropped 2.1 percent to 297.7 pence at 2:16 p.m. in London.

Memory customers have reduced utilization rates while prices are weak, yet markets will pick up again in the final three months of the year, Wild said.

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