2014: The Year of the Deal

Today brings to an end one of the most fascinating years of acquisitions since the crazy Internet era of late 1990s and 2000.

Unlike that episode, however, 2014 was a much more orderly state of affairs, and while some of the deals were not foreseen, the pricing (and volume) were within the realm of reason.

To recap:

  • TTM Technologies announced it would buy Viasystems, bringing to a close one of the most talked-about chapters in PCB industry history. The deal has cleared all but the last few regulatory hurdles, and is expected to close in mid 2015.
  • Rogers will buy Arlon, merging two leading suppliers of high-frequency laminate materials, and perhaps further complicating the supply chain for some of the smaller fabricators that lack the purchasing power of the major players, not to mention consolidating the RF/microwave product supply base for the US Defense Department. Given its shoulder shrug of TTM’s Chinese ownership, will the DoD even bat an eye over this, or will it be concerned enough to throw a wrench in the deal?
  • On the assembly side, ASM purchased DEK, which had been readied for sale since late 2011. The acquisition gives ASM top-of-the-line print-to-placement equipment offerings and positions it to compete with the major Japanese players such as Panasonic, Yamaha, Juki and Fuji.
  • Nordson acquired Dima Group, stretching its traditional dispensing and, later, AOI and test focus into SMT placement. Will Nordson keep the pick-and-place lines, or package that unit up and sell it?
  • Likewise, Amtech Systems has a pending agreement to buy BTU, stretching its semiconductor and solar production focus to include SMT reflow.
  • And just yesterday Kulicke and Soffa made a deal to buy Assembleon for $98 million in cash. While Assembleon had been expected to be acquired since Philips first put it on the block several years ago, K&S’s entry into the printed circuit board equipment space was unforeseen. Does it plan to continue to roll up other companies (Speedline?) and build a worthy competitor to ASM?

Most of the major deals that took place in 2014 happened on the supplier side. Does that presage a similar consolidation on the manufacturing end in 2015? Will some of the units long-rumored to be in play (Multek, Hitachi) finally be consummated? Will EMS, which took a breather in 2014 after major deals involving Natel (Epic), Benchmark (Suntron, CTS) the year before, catch a new spark?

We can’t wait to find out. Happy New Year!


Dover’s Big Exit

Is it the water?

Just days after Cookson announced it would split in two and spin out its Alpha Metals solder unit, Dover says it too will divest its electronics assembly and test businesses.

Just like that, we are primed to lose two of the longstanding electronics supply chain brand owners. The difference here is, Alpha’s management and ownership will remain, for now, the same, as the stock will be split among Cookson’s former shareholders.

The future of the Dover businesses, on the other hand, is much less clear. Dover hasn’t said whether it will sell the businesses piecemeal, as it did with Universal Instruments and Vitronics-Soltec in 2006. The brands on  the block — DEK, OK International and Everett Charles Technologies among them — probably brought in at least $1 billion in annual revenue prior to 2012’s dropoff, and have traditionally been higher margin performers as well. Not many equipment companies have pockets deep enough to absorb the price Dover will ask. Yet that’s what employees of those businesses must be hoping for right now, as the slash and burn methods of the private equity companies have been excruciating for everyone involved.

We don’t think this was a quick decision brought about by this year’s slump. Sources tell us Dover has been discussing the possible divestiture of these businesses for nearly a year. The guess here is that Dover’s management tired of the endless boom-bust cycles of the electronics industry. It’s hard for an equipment company to meet Dover’s goal of 10% revenue growth and 15% operating margins year in, year out.

We also believe Dover has a buyer on the hook, as some might recall that when Dover announced the impending divestiture of Universal, the deal went through a month later. Who that buyer is (ITW? Nordson?), and at what price, are now the questions.


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Hilton Rises to Nordson’s Top

In what certainly is the most significant management changeover of the year, Nordson today named Michael Hilton as its new CEO, replacing the retiring Ed Campbell.

Hill is 55, and comes from Air Products and Chemicals, where he was senior vice president and general manager in charge of the $2 billion global Electronics and Performance Materials segment.  He has a chemical engineering degree, which means Nordson will remain in the hands of an engineer (Campbell has a bachelor’s in EE).

A conglomerate in the mold of Dover and ITW, Nordson topped $1 billion in revenues for the first time a year ago. (It slipped to $819 million this year as the recession took its toll.) It has been extraordinarily well managed, growing both organically and by acquisition, but unlike some competitors it has never overreached. Its electronics brands include EFD, Asymtek, Dage, YesTech and March.

Campbell remains chairman until February, when he will be succeeded by current director Joseph Keithley, the head of Keithley Instruments. He has spent 21 years career at Nordson, the last 12 as chief executive. He is perhaps not as well-known as some of his contemporaries in electronics manufacturing, but his track record is unparalleled. Hilton’s new house is full of his predecessor’s successes.

Munich Madness Not So Crazy

Attendance at the.four-day Productronica started slow today and built as the day went on. Still, the drop in traffic is noticeable. Americans and Asians are in very short supply.

Spoke with more than 25 exhibitors today. Most say September and October sales were improved and some capacity buying is occurring in Asia.

Some interesting developments seen thus far: a new modular placer from Juki, the KE-3020RL, now in beta and due out next summer or fall; DEK’s Sentinel post-solder inspection unit, which fits on any of its post 2005 printers and features 8 2MP cameras; and Asymtek’s Simultaneous Dual Jetting setup, which is aimed at high volume PCBs. (Asymtek had, as usual, several new machines, and also is pushing hard on its new corporate identity, in which parent company Nordson’s name is prominent. More on them later.)

Ran into old friend Keith Favre, the ex-Speedline and Electrovert sales wizard who was last seen running PhotoStencil. He has launched a rep business under the name FHP LLC and is handling Foulongwin and Mirae, among others. Also, his neighbor in Texas, Bob Stevens, the ex-Speedline Asia president, is alive and well.

Also seen: A women pushing a baby stroller — complete with sleeping baby — down the show floor. That’s a first.