Electronics Production | November 19, 2008

EMS consolidations levelled in 3Q/2008

There were 14 completed transactions in Q3 2008, compared to 13 completed transactions in the 2Q of 2008, 13 in the 1Q of 2008.
Chart A shows that the q2 of 208 saw 14 transactions with a gradual upward M&A trend as compared to the 2Q or the Q3 of last year. Chart B shows that EMS consolidations represented five transactions, or 36% of total activity in Q3 2008 - an increase from three transactions in the Q2 of 2008, states the Lincoln International Newsletter.

Major transactions in the 3Q of 2008 were:
• Kimball Electronics has acquired Genesis Electronics Manufacturing, (September-08)
• Elcoteq SE has acquired the flat panel TV plant in Mexico of Koninklijke Philips Electronics NV (September-08)
• Creation Technologies has acquired Circuit Service (September-08)
• RAD Technologies LLC has sold Astrex Electronics (September-08)

Two OEM divestitures in Q3 2008 - an increase from one in the Q2 of 2008. Ths means - as a percentage of total transactions - OEM divestitures constituted of 14% in the Q3 of 2008, compared to 8% in the Q2 of 2008. Vertical horizontal decreased to four transactions in the Q3 of 2008 from five in the Q2 of 2008, representing 29% and 46% of total transactions, respectively, the report continues. There were also two EMS divestitures in the Q3 of 2008, representing 14% of total transactions, equivalent to the level of the previous quarter. In addition, there was one Private Equity Investment in Q3 2008.

Chart C shows one deal in Q3 2008 was cross-border; down from two in the previous quarter. The transaction was between high and low cost geographies. For the Q3 of 2008, five of the closed transactions in the Q3 of 2008 occurred within Western Europe (36% of total), seven transactions occurred within the U.S./Canada region and one was reported from within Asia.

Chart D shows that all transactions by size for the current quarter were led by the Micro Tier (10 transactions - around 71%); two transactions (14% of total) in the Mid Tier; Large and Small Tier EMS providers with one transaction each.

Source: Lincoln International Newsletter

Note: EMS Size Guide in $ (Sales)
• Large (Tier I) - greater than $3 billion
• Mid (Tier II) -$400 million to $3 billion
• Small (Tier III) - $100 million to $400 million
• Micro (Tier IV) below $100 million
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