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© blacksnake dreamstime.com Electronics Production | November 05, 2012

M&A activity still low in 3Q

There were five completed transactions in Q3/2012, an increase in M&A activity compared to Q2/2012. However, M&A activity fell off in the first half of 2012 versus the same period a year-earlier primarily due to economic softness.
M&A activity in the EMS industry would need to surge in the final quarter of the year to avoid a fall off for the second straight year. EMS consolidations represented one transaction, or 20.0% of total activity in Q3 2012, down from two in Q2 2012. The number of vertical/horizontal integrations increased with four transactions in Q3 2012 compared to two in Q2 2012. There were no EMS private equity deals, OEM divestitures or EMS divestitures in Q3 2012. One transaction occurred between two U.S. based companies in Q3 2012, representing 20.0% of total activity; remaining flat with the previous quarter. Cross-Border transactions between high-cost countries, as defined below, represented 40.0% of the activity in Q3 2012 with two transactions, up from zero in Q2 2012. There was one Cross-Border transaction between the UK, a high-cost region, and Singapore, a low-cost region. Finally, there was one transaction between two UK companies this quarter, representing 20.0% of total activity; down from two in Q2 2012. The Small Tier and the Mid Tier led Q3 2012, with two transactions apiece, or 40.0% of all transactions, respectively. There was one Large Tier transaction in Q3 2012, or approximately 20.0% of the total.
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