Setting the Benchmark

Will Benchmark Electronics’ announced purchase of Pemstar set off a buying spree among EMS companies?

Benchmark is paying roughly $300 million for Pemstar — about one-third of the company’s $871 million in sales over the four periods ended June 2006. However, Pemstar comes with roughly $125 million in debt (not including accounts payable) and lost a cumulative $5.7 million during the past four quarters. Some restructuring will likely be in order to eliminate manufacturing redundancies in Minnesota, Texas, Ireland, Sinagpore and Thailand.

The buy, though large, won’t boost Benchmark’s place in the global EMS rankings. The company remains eighth, well behind No. 7 Elcoteq. In itself, I would not expect this to spur competitors to make moves.

However, corporate America is sitting on enormous piles of cash. I could certainly see one or two other large deals, including one of near-seismic proportions, in the coming months.

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About Mike

Mike Buetow is editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He is also vice president and editorial director of UP Media Group, for which he oversees all editorial and production aspects. He has more than 20 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow