Rakon Announces US37 million Acquisition

Media information : Auckland 12 February 2007

Rakon Limited Acquires Frequency Control Products Division Of C-Mac Microtechnology

Rakon Limited ("Rakon"), a world leader in GPS TCXO technology, announces that it has entered into an unconditional agreement to acquire the Frequency Control Products business (FCP) of C-MAC MicroTechnology for US$37 million.

The acquisition of FCP is highly complementary to Rakon's business. The combination of FCP with Rakon's existing business will provide Rakon with leading market positions in the supply of crystal oscillators to the GPS, telecommunications network timing and synchronisation, and aerospace markets.

The acquisition will be funded by a NZ$60.0m equity placement to institutional and habitual investors which will be underwritten by UBS New Zealand Limited.

Trading of Rakon's shares on the NZX has been suspended at the company's request while the placement is being completed. Completion of the acquisition is expected to take place on 2 March 2007.

About FCP

FCP is a division of UK based C-MAC MicroTechnology. FCP is a manufacturer of quartz crystal oscillators, primarily focusing on supplying components for use in demanding applications such as telecommunication infrastructure, aerospace and satellite location systems.

The FCP business employs approximately 240 people with operations in the United Kingdom (Lincoln, Harlow and Crewkerne) as well as France (Argenteuil).

The FCP business has a 65 year pedigree in the manufacturing of quartz based products and is a leader in the supply of these products to the telecommunications infrastructure market. C-MAC MicroTechnology will continue to provide high reliability hybrid microelectronic design and manufacturing products and services.

Acquisition

In particular the acquisition will:

* Significantly increase Rakon's worldwide sales coverage;

* Increase Rakon's penetration in high growth markets including network timing synchronisation, wireless base stations and emergency satellite location;

* Enhance Rakon's product range to cover the full range of crystal oscillator products, from commodities to high end Oven Controlled Crystal Oscillators (OCXOs); and

* Provide Rakon with unique intellectual property, in particular in the Pluto, OCXO and SC cut crystals products, as well as roadmaps for future product development.

Brent Robinson, Managing Director said, "This is a key step in making Rakon a truly global enterprise with a diverse product range and strong relationships with blue chip customers in a wider range of high growth industries. FCP not only has a very strong European base but a global presence that complements and builds on our existing structure."

Mr Robinson said, "Telecommunications infrastructure has been growing strongly across the board with the deployment of next generation technologies and renewed investment from network owners. FCP is a recognized leader in the supply of key components to this market and with Rakon has the potential to significantly improve this position."

"On top of this there are some short term opportunities in other areas that shouldn't be overlooked, such as the emergency satellite location market, which is expected to grow strongly over the next couple of years."

FCP comes with a very experienced and capable management team. In the short term its integration with Rakon will be primarily focused around sales and marketing. This means the FCP business will effectively continue to operate in its current form and it will remain business as usual for staff, customers and suppliers. Under the agreed terms of the acquisition, Rakon have been granted the rights to continue using the C-MAC trademark and logo for a period of 18 months.

Financial performance and impact

For the 12 months ended 31 August 2006, revenue for the FCP business acquired from C-MAC MicroTechnology was NZ$63.8 million and earnings before interest, taxation, depreciation and amortisation (EBITDA) were NZ$7.0 million. This was a 25% increase in revenue and 483% increase in EBITDA on the prior year.

The acquisition of FCP is expected to be earnings per share (EPS) accretive. The full year pro forma impact on Rakon's 31 March 2007 forecast EPS is estimated to be 21% accretive.

Earnings upgrade for existing business

Rakon also advises its forecast earnings before interest and taxation (EBIT), for the year ending 31 March 2007, excluding the acquisition of the FCP from C-MAC MicroTechnology, will be marginally in excess of NZ$16 million.

This is an increase of approximately $1.2 million over guidance given at the companies ASM in September 2006.

Brent Robinson, Managing Director said, "The first part of the calendar year has traditionally been slower for us as distribution channels consume stock built up for the holiday season. This year demand has ramped up faster than expected after Christmas. In particular personal navigation devices demand through to the end of March is looking strong".

The actual earnings impact of the acquisition of FCP in FYE 2007 is expected to be insignificant as the post completion financial performance contribution of FCP will only be for a four week period and will be somewhat offset by integration costs.

Founding shareholder and director participation

Despite the desire of Rakon's founding shareholders and directors to participate in the placement this was not pursued as an NZX waiver would have been needed and it was felt this could restrict the pool available for other investors.

In addition to this placement Rakon will make available to all existing shareholders the opportunity to acquire additional shares via a share purchase plan (SPP). Details on the proposed SPP will be announced following completion of the equity placement

About Rakon Limited

Founded in 1967 Rakon is the world leader in the design and manufacture of quartz crystals and oscillators for demanding applications such as GPS and wireless communications.

Based in Auckland, New Zealand, Rakon has offices in North America, Europe and Asia and supplies 50 to 60% of the world's GPS market.

Rakon has been recognized as one of New Zealand's leading technology companies as well as Supreme Exporter of the year in 2005. Rakon listed on the NZX in May 2006.

Further details on Rakon Limited are available on its website.

www.rakon.com

A conference call will be held today at 11:30am to provide more details on this announcement. Details of this call will be made available on the NZX.

Ends

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