One of the jewels of American advanced materials’ technologies is on the verge of a potential takeover by a Chinese manufacturer.
Liquidmetal Technologies, a Caltech spinoff based in California, disclosed this month in a flurry of filings with the Securities and Exchange Commission that a Chinese investor has the right to buy up to 405 million of the company’s stock at a price starting at just eight cents per share and to name three directors to its board, which is expanding to seven. At the same time, employment contracts with its CEO and other top officers were rewritten allowing their termination next year.
Since the 1990s, Liquidmetal has been attempting to commercialize metal alloys that retain their amorphous atomic structure and do not develop crystalline grains generally associated with metals. Liquidmetals exhibit superior strength and other superior performance characteristics compared to crystalline metals.
Liquidmetal first made a foray into golf clubs that was unsuccessful, and has struggled since to find a commercial application. There has been significant interest. The high cost and novelty of the technology seem to be the primary barriers.
In an effort to raise cash to stay afloat, Liquidmetal was forced to sell exclusive market licenses to Apple and Swatch, which has announced a few uses for the alloy. Significant new Apple uses are almost constantly rumored.
An important breakthrough came when machine builder Engel agreed to develop a special injection molding machine that would allow mass production of net shape parts. Engel began aggressively marketing the technology in Europe in the past year.
Liquidmetlal’s cash flow has remained a significant issue as development costs have mounted and management’s promises of success have not borne fruit.
Interest by the Chinese investor was not publicly known.
He is Yeung Tak Lugee Li, 56, the founder, chairman, and majority stockholder of DongGuan Eontec Co. Ltd., a Chinese company listed on the Shenzen Stock Exchange that makes precision die-cast products and is involved in the research and development of new materials. Li founded Eontec in 1993. He is also the founder and sole shareholder of Leader Biomedical Limited, a Hong Kong company involved in the advancement of biomaterials and surgical implants. Medical is a potentially significant market for Liquidmetal. So are automotive and defense. Li serves as an analyst for the Institute of Metal Research at the Chinese Academy of Sciences and teaches at several universities in China.
Executed simultaneously with Li’s Purchase Agreement was the award of an exclusive license to Eontec for Liquidmetal development in China and the rest of Southeast Asia, including the Koreas and Thailand.
The stock purchase agreement is subject to the approval of a special meeting of Liquidmetal shareholders to be held before the end of May. Share prices rose almost immediately after the announcement from eight cents to 13 cents.
In the world of global economic growth and advancement of materials’ technologies, this is good news. Liquidmetal needed a deep-pocketed investor who believes in the technology and will invest in it.
Is this a technology with potentially significant military applications? I would feel comfortable if the U.S. government took a close look at the deal.