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Akoustis RFMi acquisition +3

09:30 18-Oct-21


Akoustis has purchased a majority stake in Texas-based RFM Integrated Device for $6M in cash plus ~$2.5M in stock.  It also gains the right to purchase the remaining 49% between February 28th and June 30th for an extra $3.5M in cash and ~$4.0M in stock.  I note that Akoustis should not have to dilute current shareholders to complete both deals so long as AKTS stays above $3.  Management expects that this will provide a $500K to $1M boost to revenue for 4Q21, and that no regulatory review will be required.

The associated conference call was very short and unrevealing; perhaps management should consider providing more than an hour and a half notice.  For this deal, it didn't do more than reiterate that Akoustis is mainly gaining sales channels.  However, RFMi's design capabilities are also interesting in conjunction with the Akoustis entry into the timing market.

If the revenue figure can be annualized, which is questionable, then total price of $15M represents 5x sales, which is quite reasonable and leads me to wonder if this is an opportunistic distressed deal.  Thus, I'm not surprised that AKTS has given back most of the pre-market gain I referenced earlier, but think this will be an overall positive for the stock and the company, at least pending further performance details in the upcoming quarterly reports, the next of which should be in just a week or two.

The phone call also gave management its first opportunity to respond to the recent Qorvo lawsuit claiming patent infringement and improper use of proprietary information “obtained by its systematic poaching of Qorvo’s employees.”  Of course, Akoustis claims the suit is without merit.  Without commenting on that, I see it as further evidence of Akoustis making headway against the incumbents.  Just based on company sizes and resources, it represents both a major threat and opportunity.