Solectron to acquire C-Mac Industries for 1.59 times revenue

Weekly Corporate Growth Report, Aug 13, 2001

The Deal: Solectron Corp. has agreed to purchase C-Mac Industries Inc. for $2.7 billion in stock. The aquisition is a move by Solectron to cement its position as the world's largest electronics contract manufacturer. After news of the transaction was announced, shares of C-Mac lost 33 cents to $22.67, and Solectron shares fell 60 cents to close at $17.20. Discussion: C-Mac Industries is a contract manufacturer for the communications and electronics industries. The company also offers its services to auto, computer and instrument makers. The firm designs, assembles, packages and distributes a broad range of electronics. C-Mac also makes custom microcircuits and frequency control products. The company has close ties with telecom giant Nortel Networks, which accounts for 60 percent of sales. C-Mac's numerous acquisitions have included several Nortel facilities, and it has deals to continue making components for Nortel.

Solectron is the world's number one provider of contract electronics manufacturing services. High-tech giants including Ericsson, Cisco Systems and IBM outsource production to Solectron to cut their own costs. Solectron builds electronic systems and subsystems for computers, consumer electronics, communications and semiconductor manufacturing equipment. Its supply chain management services include product design, prototyping, warehousing and distribution.