Supply-chain facilitator Solectron Corp. on Thursday said it will acquire Montreal-based integrated electronics manufacturer C-MAC Industries Inc. in deal valued at US$2.7 billion.
Koichi Nishimura, president and chief executive officer for Milpitas, Calif.-based Solectron said the combined companies will be better able to meet the growing outsourcing needs of original equipment manufacturers.
“OEMs need reliable global partners with a broad range of expertise,” Nishimura said. “Today’s economy is forcing OEMs to reduce costs and focus even more tightly on core competencies.”
Dennis Wood, chairman, president and CEO of C-MAC, said matching C-MAC’s vertical technology design manufacturing services and Solectron’s supply-chain expertise will result in more comprehensive solutions for OEM’s worldwide.
“With our combined capabilities, we will reduce our customers’ time to full production and overall cost model,” Wood said.
The agreement, which is expected to close by the end of 2001, will deliver to Solectron C-MAC’s high-end technical expertise, including systems integration and optical networking components manufacturing and assembly capabilities. Nishimura said in particular, the acquisition of C-MAC compliments Solectron’s strength in the network and telecommunications equipment sectors.
“We are extremely well-positioned to capitalize on the upturn and continued growth in both the network and telecom equipment industries,” he said.
Nishimura also said the acquisition of C-MAC comes with margin and revenue opportunities. Solectron, which is one of the top 10 consumers of C-MAC product, estimates US$60 to US $120 million in synergies.
Further, the agreement with C-MAC helps Solectron meet its goal of targeting new markets, in this case the automotive electronics sector, one of the primary consumers of C-MAC’s integrated electronics solutions. Both Nishimura and Wood referred to this as a fast-growing market.
“Given that major automotive OEMs are now seeking increased electronic solutions capability they do not have in house, we will have the scalability to take on larger OEM programs,” Wood said.