CEOs: Not Much EMS M&A Expected

Earnings announcements came out this week for Flextronics, Sanmina-SCI, CTS, Celestica, Key Tronic, IEC and a few others.

I’ve been listening to the quarterly analyst briefings, and it would *appear* that most of the major EMS companies don’t plan any earth-shaking M&A activity.

Most are taking the approach of Celestica CEO Craig Muhlhauser, who said they would focus on areas like health care where they don’t have tremendous established depth. Flextronics CEO Mike McNamara didn’t even raise the subject. Neither did Sanmina chairman Jure Sola.

And congratulations to CIRCUITS ASSEMBLY EMS Company of the Year Key Tronic on yet another profitable quarter. That’s six straight years, and counting.

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About Mike

Mike Buetow is president of the Printed Circuit Engineering Association (pcea.net). He previously was 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 spent 21 years as vice president and editorial director of UP Media Group, for which he oversaw all editorial and production aspects. He has more than 30 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

2 thoughts on “CEOs: Not Much EMS M&A Expected

  1. Mike, just as your EMS Merger and Acquidition article comes out, I see this merger announced in the Defense EMS sector. Isn’t Steve Pudles the Secretary/Treasurer of IPC? Hasn’t Kuchera had a very troubled history – with a couple of FBI raids in the last year – trying to link Kuchera to John Murtha and campaign contributions?

    Here is the API press release:
    News Release Details

    Date: Thursday, January 21, 2010

    API Technologies Announces the Acquisition of the Kuchera Group of Companies

    Acquisition will Double the Size of Company with Combined Revenues in Excess of $120 Million
    NEW YORK, NY–(MARKET WIRE)—January 21, 2010 — API Technologies Corp. (ATNY.OB) (“API” or the “Company”), a prime contractor in secure communications, electronic components and subsystems to the global defense and aerospace industries, today announced that it has acquired substantially all of the assets of the Kuchera Group of Companies (“KGC”), including Kuchera Defense Systems, Inc. and Kuchera Industries, Inc. KGC is a large U.S.-based defense subcontractor specializing in sophisticated electronics and highly-engineered systems for the defense, aerospace and communications industries.

    Under the terms of the transaction, API acquired substantially all of the assets of KGC for $24 million, $14 million payable in cash and $10 million financed with a short-term note from the Sellers, plus 3.2 million shares of API common stock. The API shares will be issued in three tranches over a period of 24 months. The Company funded the cash portion of the purchase through a $20 million debt facility.

    Kuchera Highlights
    • Founded in 1985, KGC is a leading supplier of sophisticated engineering services to the defense and communicates industries.
    • KGC generated approximately $65 million in revenues for the twelve month period ended June 30, 2009 and has a current backlog of over $65 million.
    • Products include printed circuit boards, robotic systems, unmanned aircraft, electro-mechanical assemblies and final systems integration.
    • Fortune 100 client base including Raytheon, Northrop Grumman and Boeing.
    • Over 100,000 square foot facility in Johnstown, Pennsylvania with approximately 300 employees, including 50 design and development engineers.
    • Experienced and long standing management team who will continue in their leadership roles, including Carl Sax, Executive Vice President and General Manager.

    “The acquisition of the assets of the Kuchera Group of Companies is a transformational step forward for our Company in becoming a true leader in the defense subcontracting industry,” stated Stephen B. Pudles, Chief Executive Officer of API Technologies Corp. “Together with our existing business, the new combined entity will be better positioned to serve our global clients, including General Dynamics, Raytheon, Northrop Grumman and governments around the world. This acquisition also includes a very experienced and diverse management team that we welcome to the API family.”

    Mr. Pudles continued, “As a result of this transaction, the founders of KGC, Bill Kuchera and Ron Kuchera, will be leaving the company to pursue other opportunities. We would like to thank them for building a truly world-class company and wish them all the best in their future endeavours.”

    Carl Sax, Executive Vice President and General Manager of KGC said, “We are very excited to be joining the API family. With both companies working together, we look forward to accelerating our growth, entering new markets and leveraging the core competencies of the combined API.”

    Phillip DeZwirek, API’s Chairman, stated, “This transaction is another exciting and important step in API’s growth to being one of the leading defense subcontractors in the world. It is immediately accretive and further enhances our financial strength and overall position.”

    About API Technologies Corp.

    The Company is engaged as a prime system contractor in secure communications and a leading provider of electronic components and subsystems. API Technologies’ customers include the U.S. Department of Defense (DoD) and its prime contractors, U.S. Government intelligence agencies, the U.S. Department of Homeland Security (DHS), U.S. Department of State (DoS) and U.S. Department of Justice (DoJ), including various government and prime contractors of Canada, the United Kingdom, NATO and the European Union. The Company is engaged in providing innovative design, engineering and manufacturing solutions to its customers. The Company has also developed expertise in the R&D and manufacture of nanotechnology and MEMS products. API Technologies trades on the OTC Bulletin Board under the symbol ATNY. For further information, please visit the company website at http://www.apitech.com

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