Cambridge Display Technology (CDT), the UK pioneer of light emitting polymer (LEP) technology, has struck a strategic agreement with two US venture capital companies, guaranteeing its immediate investment needs, and preparing the company for a possible Nasdaq listing within two or three years.

In a complex agreement, Kelso Investment Associates, one of the US’ oldest investment companies, and Hillman Capital have agreed in principle with CDT shareholders to acquire at least 51% of CDT, in exchange for an immediate investment of 10m pounds ($15.9m) and a further offer to shareholders of 6.57 pounds per share. The offer values CDT at 70m pounds ($111.8m).

CDT ceo Danny Chapchal called the agreement a formidable deal for the company. As well as bringing an injection of 10m pounds, the fact that the money is American money is very important said Chapchal. With respected US investors backing CDT technology, it is now 99% certain that the company will list on Nasdaq within two or three years when it goes for IPO, said Chapchal.

The investment will go towards equipping CDT’s new Cambridge premises, in a building that was original an arm of the Royal Greenwich Observatory, and recruitment of new researchers. CDT employs roughly 40 people today, but expects to grow to 60 staff in the next two years.

CDT’s US suitors have imposed several conditions on the deal. Chapchal has been asked and agreed to remain as CEO, and CDT’s shareholders must agree to sell the 40% their holdings that is required to give Kelso and Hillman a minimum stake of 51% in CDT Holdings Ltd, the Cambridge company’s parent holding company, whose registration will be moved to the US if the deal goes ahead.

Chapchal said there is little likelihood that CDT’s shareholders will refuse Kelso and Hillman’s offer, but he believes it is equally unlikely that any shareholder will sell out completely. Investors such as Cambridge University, whose Cavendish Laboratory was the research cradle of CDT, may sell a minority of its interest. However, investors whose interest is purely financial, such as Young Associates, the high-tech venture company set up by Lord Young, the former Cable & Wireless Plc chairman, are expected to sell a larger proportion of shares. In most cases, Chapchal said, CDT’s shareholders are expected to sell enough shares to at least recoup their original investment. Given that CDT was originally valued at ú9m pounds ($14.3m), CDT’s shareholders will be able to retain a significant number of shares while still realizing a tidy profit from the US offer.

Lord Young, chairman of Young Associates and of CDT, said his company will certainly approve the US offer and confirmed that it will retain an interest in CDT. Young said that the US investment was the right deal for CDT at the right time. In order to bring this technology to market, you need to go up a league in terms of associations and partnerships. And you need the US involvement, he said.

With Seiko-Epson and Philips both close to bringing CDT-developed LEP technology to market, Lord Young said CDT must now be prepared to react quickly to future opportunities. Kelso and Hillman have the right contacts in the US to make this possible he said. One of these days we may need to build a manufacturing plant, and that could cost $500m, he said.

In fact, so far, CDT has avoided becoming involved in manufacturing or even in developing revenue generating business. We’ve been fairly deliberate in stifling that [income generating business] said Chapchal. Instead the company has pursued a policy of judicious licencing providing a select group of technology partners such as Philips and Seiko-Epson with licenses in the context of joint-venture agreements. In this way the company will retain some ownership of the intellectual property going forwards Chapchal said.

Among the first LEP-based products likely to come to market may be a black and white TV screen which Seiko unveiled in prototype form last year. However, the technology has moved on since then, and Chapchal promised that CDT will be making some exciting technology announcements as soon as the Kelso and Hillman deal has been finalized, probably in July.