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© otnaydur / dreamstime.com Electronics Production | January 05, 2012

Plexus acquires Kontron's module unit in Malaysia

Plexus Corp. and Kontron AG announced their intention to enter into a strategic manufacturing arrangement.
Under this proposed arrangement Kontron AG (Kontron) will transition all manufacturing of its Kontron Design Manufacturing Services (M) Sdn. Bhd. subsidiary (KDMS) located in Penang, Malaysia to Plexus Corp. (Plexus), primarily to its Penang facilities.

Plexus would acquire the inventory and equipment of KDMS, hire substantially all KDMS employees and pay a modest premium; in exchange Kontron would commit to approximately $100 million of incremental revenue annually for two years.

No real estate is included in this proposed transaction. The arrangement is subject to entry into a definitive agreement, which is anticipated over the next few weeks and expected to provide for total consideration of approximately $30 - 35 million for the assets to be transferred.

Dean Foate, Plexus President and Chief Executive Officer, commented, “We believe this strategic arrangement will expand and strengthen our existing relationship with Kontron, capitalizing on our demonstrated leadership in mid-to-low volume, higher complexity manufacturing programs. Kontron is a global leader in embedded computing technology and a strong partner for Plexus in our Industrial/Commercial market sector. In fiscal 2012 this arrangement is expected to add an incremental $50 - $75 million of revenue for Plexus, based on specified volumes from Kontron, and be modestly accretive to EPS. Once fully transitioned into our manufacturing facilities, which is expected by the end of our fiscal 2012, we anticipate that the program will be consistent with our long-term financial model. We will provide further details regarding this agreement during our scheduled fiscal first quarter earnings announcement conference call on January 19, 2012.”

Ulrich Gehrmann, Kontron Chief Executive Officer, added, "The agreement enables Kontron to focus on our core competencies in providing superior engineering services. By expanding our relationship with Plexus, Kontron ensures its continued commitment to best-in-class quality products. The result is an increase of efficiency in operational expenses and working capital, positioning Kontron for a larger market penetration of higher gross margin design wins.”

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