Knowles Corporation Announces Strategic Sale of CMM Business
Knowles Corporation's Definitive Agreement for CMM Sale
Knowles Corporation (NYSE: KN), a key player in high performance electronics, has made headlines with its recent strategic move to sell its Consumer MEMS Microphones (CMM) business to Syntiant Corp for an impressive $150 million. This decision follows a comprehensive evaluation of the company's strategic direction, as it seeks to focus more on industrial technologies.
Details of the Transaction
The sale is aimed at facilitating Knowles’ transition into a more industrial-focused technology firm. The company currently operates within various segments, including Precision Devices and MedTech & Specialty Audio, serving critical markets in aerospace, defense, medtech, industrial applications, and electrification. With the remaining Knowles businesses contributing $560 million in revenue, this transaction reflects the firm’s commitment to reallocate resources optimally.
Structure and Financial Considerations
Under the terms of the agreement, Knowles will receive $150 million in total, with the transaction structured as $70 million in cash and $80 million in Syntiant preferred stock. Syntiant is currently securing financing to ensure a smooth transition following the sale. The closing date for this transaction is subject to regulatory approvals and is expected to occur in the upcoming fourth quarter.
Management Insights
Jeffrey Niew, CEO of Knowles, emphasized the importance of this move, stating, "This Transaction with Syntiant represents a milestone in our evolution into an advanced industrial technology company while safeguarding our Hearing Health intellectual property and maximizing shareholder value.” This sentiment showcases the management's focus on long-term growth and sustainability.
Implications for Knowles' Future
The sale of the CMM business allows Knowles to enhance its operational focus and potentially increase its market share in more lucrative sectors. The net proceeds from this deal are earmarked for reducing debt and repurchasing company stock, a strategy that underscores the company's commitment to improving shareholder returns.
Quarterly Guidance Changes
As Knowles prepares for the impacts of this transaction, it has updated its third quarter guidance for 2024. Moving forward, the financial results from the CMM segment will be categorized under discontinued operations. The anticipated revenue for the quarter, excluding the CMM segment, is projected to be between $139 to $143 million.
Looking Ahead
With expectations of a revenue range for the fourth quarter setting between $140 to $150 million, Knowles’ future in industrial technologies looks promising. Additionally, the company is placing significant emphasis on non-GAAP financial measures to maintain transparency regarding its financial health and operational efficiency.
About Knowles Corporation
Founded in 1946, Knowles Corporation has solidified its position as a market leader in high-performance capacitors and RF filtering products, as well as advanced microphones and speakers. Its extensive focus on customer service, innovative technologies, and superior manufacturing processes enables Knowles to serve demanding industrial markets effectively.
About Syntiant Corp
Syntiant Corp, recognized for its pioneering work in low power edge AI technology, plays a critical role in enabling speech, audio, and sensor applications across consumer and industrial sectors. From earbuds to automotive solutions, Syntiant’s innovations are poised to shape the future of smart technology.
Frequently Asked Questions
What does the sale of the CMM business mean for Knowles Corporation?
This sale allows Knowles to streamline operations towards more profitable industrial technology markets, focusing on higher growth opportunities while reducing debt.
How much is the Consumer MEMS Microphones business sold for?
The CMM business was sold for $150 million, structured in cash and preferred stock.
What are the expected changes in revenue for Knowles?
The updated guidance anticipates revenues between $139 to $143 million for Q3 2024, excluding CMM operations.
Who is Syntiant Corp?
Syntiant is a company focusing on low power AI applications, providing innovative technology solutions for various markets including automotive and smart devices.
What is Knowles' overall business strategy moving forward?
Knowles aims to concentrate on becoming a premier industrial technology firm while maximizing shareholder returns and investing in high growth markets.
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