Microsemi Corp. Buys 60% of Semiconductor Maker
Microsemi Corp., the Santa Ana-based semiconductor company, has bought 60% of Vitarel Microelectronics Inc., a fast-growing San Diego maker of semiconductors and integrated circuits, for “close to $3 million” in debt and equity financing.
Microsemi also acquired an option to buy the remaining 40% of Vitarel in a deal described by a Microsemi official as a “recapitalization” of the closely held San Diego firm.
Vitarel sales should reach $10 million for the fiscal year ending next June 30, up from $2.8 million the previous year, president G. Robert Tatum said. Since February, Vitarel’s payroll has grown from 65 to 215, all based in San Diego.
Microsemi, a publicly owned manufacturer of power-related and semiconductor products with about 1,100 employees, posted net income of $5.5 million on revenues of $38.7 million for the year ended last Sept. 30. For the first nine months of this fiscal year, the company reported net income of $3.9 million on sales of $32.2 million.
Shipments of Vitarel’s circuits and microelectronic components have grown from a rate of $50,000 per month 18 months ago to $850,000 per month, Microsemi chief financial officer David Sonksen said.
But the company has lacked sufficient working capital to pay for its explosive growth and has been unable to fill recent product orders, Sonksen said.
Microsemi also lost a significant sum of money last year despite the revenue growth and was forced to seek outside capital, he said.
In August 1986, Tatum engineered a leveraged buyout of Vitarel from Medtronic Inc. of Minneapolis, one of the world’s largest pacemaker manufacturers.
Tatum then announced plans to redirect Vitarel’s market strategy away from its reliance on supplying circuits to pacemaker manufacturers, including Medtronic. Now it will supply defense electronics companies.
Tatum will remain Vitarel’s chief executive, Sonksen said.
Vitarel was introduced to Microsemi officials by AVX, a Great Neck, N.Y., manufacturer of ceramic capacitors that sold its Costa Mesa-based Integrated Networks Inc. division to Vitarel in February. AVX is also a Vitarel shareholder and will invest an additional $1 million in the recapitalization announced Thursday, giving it a less than 20% interest in the company.