In January 2003, Credence Systems acquired assets of the German semiconductor test-equipment business SZ Testsysteme from Klaus-Christian and Gabriele Penner for about $4.7 million, according to contemporaneous reporting. Credence later reported the fiscal 2003 purchase as certain assets and liabilities acquired out of bankruptcy for approximately $4.6 million in cash. The deal was an asset purchase—not a purchase of all shares in the companies.
What happened in the January 2003 deal?
The transaction followed a short sequence. SZ Testsysteme had entered bankruptcy; in December 2002, Klaus-Christian and Gabriele Penner bought assets of the defunct business. The following month, Credence bought SZ assets from the Penner family, as reported by EE Times.
The distinction between assets and shares matters. EE Times described Credence’s January transaction as an acquisition of assets. Credence’s later FY2005 Form 10-K says the fiscal 2003 purchase comprised certain assets and liabilities of SZ Testsysteme AG and SZ Testsysteme GmbH, acquired out of bankruptcy. It does not characterize that initial deal as a purchase of all outstanding stock.
Why are two prices reported?
EE Times put the announcement-era price at approximately $4.7 million. Credence’s FY2005 SEC filing later reported approximately $4.6 million in cash. These are the figures as reported by their respective sources; they should not be treated as an exact, identical amount.
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What equipment and markets did SZ serve?
SZ made automatic test equipment (ATE) used to test semiconductors. Its portfolio focused on analog, power, automotive, and communications applications, rather than consumer electronics testers. For manufacturers, semiconductor test equipment checks whether chips meet performance and reliability requirements before they are used in products.
Credence already had a business in mixed-signal and wireless testing. It viewed SZ’s automotive emphasis as complementary. In contemporaneous coverage, Credence chairman and CEO Dr. Graham J. Siddall explained the rationale this way:
“Historically our strength and expertise have been in the mixed-signal test market, whereas SZ’s focus has been primarily in the automotive test sector, a sector we believe will demonstrate strong, steady growth over the next five years,” said Dr. Graham J. Siddall, chairman and chief executive officer of Credence Systems.
EDN attributed that statement to Siddall in its 2003 coverage. The growth expectation was a forward-looking view at the time of the announcement, not a present-day assessment.
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How did Credence plan to run the acquired business?
Credence said SZ would operate as a division, with development, manufacturing, and support continuing in Amerang, Germany. It planned to connect SZ’s sales, service, and applications support to Credence’s worldwide network. Credence’s FY2005 filing later described about 135 employees at Credence-SZ in Amerang; that is a later-reported headcount, not a current figure.
How were the later German and Japan transactions different?
Credence’s FY2005 Form 10-K also records two separate transactions. They should not be combined with the initial purchase of German SZ assets:
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| Transaction | What Credence reported | Reported amount |
|---|---|---|
| Initial German asset purchase, fiscal 2003 | Certain assets and liabilities of SZ Testsysteme AG and SZ Testsysteme GmbH acquired out of bankruptcy | Approximately $4.6 million in cash in Credence’s FY2005 filing; EE Times reported approximately $4.7 million at announcement |
| Japan, August 2003 | Certain assets of SZ Testsysteme Japan Limited | Approximately $1.0 million, including acquisition costs |
| Germany, February 2004 | All outstanding stock of Credence-SZ GmbH; the entity was then merged into Credence-SZ System GmbH | Approximately $649,000 in cash |
The follow-on amounts and transaction descriptions come from Credence’s FY2005 Form 10-K. The February 2004 stock purchase was an equity transaction involving Credence-SZ GmbH, unlike the initial 2003 asset purchase.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What was the market outlook at the time?
EDN reported Gartner Dataquest’s estimate that automotive semiconductors generated more than $13 billion in revenue in 2002, and its forecast of $21 billion by 2006. The $21 billion figure was a forecast reported in 2003, not a claim about what the market ultimately achieved or a current market estimate.
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