Filtronic ready to recruit after acquisition

The group, which was spun out of the University of Leeds in 1977 by Professor David Rhodes, said it was buying Leeds-based Isotek in a cash and shares deal worth 10.7m.

Isotek develops state-of-the-art microwave filters used in mobile phone base stations, and is expected to benefit from ballooning demand for next-generation smart phones such as the iPhone.

"This is a transformational deal for us," said chief executive Hemant Mardia, adding he expects to recruit in Yorkshire as a result. "This allows us to access the base station side of wireless infrastructure. It's a significant opportunity to really scale up the combined businesses."

Filtronic has been promising acquisitions for some time, and expects the deal to increase revenues by 15m by 2012, doubling the group's forecast annual sales of 15m.

Isotek employs 28 staff, with 18 in Leeds, nine in the United States and one in China. While Isotek traces its name back to the late 1970s, it was established in its current form in 2006 by former Filtronic employees. They left the group when Filtronic sold its wireless infrastructure business to Powerwave Technologies for 184m.

Isotek's management includes Alan Needle, the former chief executive of Filtronic's wireless business and Dr Christopher Mobbs, the group's former chief technical officer.

Under the deal, Professor Rhodes will also return to provide consultancy services to Filtronic. As of a year ago, he was Isotek's biggest shareholder.

Figures for the year to the end of May show Isotek turned over 0.8m and made a 1.9m loss. Filtronic will pay Isotek's owners 4.35m in cash plus 18.5m of new shares – worth 20 per cent of the group's enlarged share capital. The deal will need approval from Filtronic shareholders.

It is expected to be earnings enhancing by 2012.

Dr Mardia is a former student of Professor Rhodes at Leeds.

Eric Burns, analyst at WH Ireland, said: "Strategically, it makes good sense as it takes Filtronic back into the heart of the base station market."