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SMT & Inspection | February 23, 2009

Orbotech finalises deal with Orpro Services for assembled PCB business

<em>Update</em>: Commencing in the third quarter of 2008, as part of the re-focusing of its strategic plan, the Company scaled back its activities in the assembled PCB business. During the first quarter of 2009, the Company signed an agreement with Orpro Services s.r.l. of Italy, for the sale of Orbotech’s assembled PCB business in Europe and the Americas.
The agreement includes R&D, manufacturing, sales and service of Orbotech’s automated optical inspection (AOI) and related process control solutions in the electronics assembly industry. The transaction is subject to customary conditions to closing, including any requisite regulatory approvals, and is expected to close within two (2) months. Orbotech will continue to support and service its installed base in Asia Pacific, as before.

Prodelec S.p.A., an affiliate of Orpro Services, has been one of the Company’s business partners for the past twelve years; and Orbotech is committed to working together with Orpro Services and its affiliates to ensure a smooth transition and minimal disruption to its client base of European and American PCB assembly houses.

Rani Cohen, Chief Executive Officer of Orbotech Ltd., remarked, “We are confident that we have partnered with the best company to minimize disruption to our existing client base, while providing a clear path for our customers to continue to receive best-in-class solutions and professional service in the future. This business fits naturally with Orpro Services s.r.l., whose sister company Prodelec S.p.A. has been a business partner of Orbotech in Europe for the past 12 years.

“Orbotech has been an important strategic partner for the Group and has helped us in achieving leadership in the European assembled printed circuit board market," stated Roberto Gatti, CEO at Fin.Pro. "Adding Orbotech’s portfolio to our broad range of solutions is the natural conclusion of our longstanding collaboration, and will bring additional benefits to our mutual customers."
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Beginning in the fourth quarter of 2008, the Company has been experiencing a decline in new FPD equipment orders. The current overall limited market visibility makes it difficult to predict exactly when FPD manufacturers will renew their fabrication expansion plans. The Company is investing substantial effort in the integration of PDI into the Orbotech group, which is proceeding ahead of schedule and is already in its second phase. The Company expects to realize operational synergies of approximately $20 million related to the PDI acquisition in 2009.

As previously announced, during the second half of 2008, in light of the difficult worldwide economic conditions, the Company adopted measures designed to re-align its infrastructure, including a reduction in the Company’s worldwide workforce in the second half of 2008 and other cost-cutting measures. These measures, combined with the operational synergies relating to the PDI acquisition, are anticipated to result in total cost savings of approximately $65-70 million in 2009. The costs associated with these savings are reflected in the restructuring charges recorded in 2008.

Revenues for the year ended December 31, 2008 totaled $429.5 million, compared to the $360.7 million recorded in 2007. Net loss for the year ended December 31, 2008 was $135.3 million, compared to net income of $1.5 million for the year ended December 31, 2007.

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