Monday November 16, 04:59 PM
UPDATE 3-TTM to buy Meadville's PCB business for $521 mln
By Manasi Phadke and S. John Tilak
BANGALORE, Nov 16 (Reuters) - Printed circuit board maker TTM Technologies Inc agreed to buy Hong Kong's Meadville Holdings Ltd's printed circuit board (PCB (Brussels: PCBB.BR - news) ) business for about $521 million in cash and stock to diversify its business and expand into Asia.
The deal will create the world's No. 3 PCB maker, with combined 2008 annual sales of $1.35 billion.
Shares of TTM rose as much as 11 percent to $12.39 Monday morning on Nasdaq (NASDAQ: news) , but pared some gains and were up 9 percent at $12.24 in late morning trade. They closed at $11.21 Friday.
'Investors have been waiting a number of years for TTM to make an announcement that they were heading into Asia,' Longbow Research analyst Shawn Harrison said.
The combination is expected to add to earnings without synergies within the first year after closing, the company said.
'The deal looks accretive right out of the gate by at least 10 cents or more per year,' Harrison said.
The transaction is expected to be completed in the first quarter of 2010, TTM said.
The company will pay $114 million in cash and the rest in the company's shares to Meadville's shareholders, TTM said in a filing with the U.S. Securities and Exchange Commission.
Post-transaction, Meadville shareholders will own about 45 percent stake in TTM, with Tang Hsiang Chien, trustee of the Tang Family Trust, holding about 33 percent.
Tang Hsiang Chien, father of Hong Kong Chief Secretary for Administration Henry Tang, will also have a place on TTM's board.
Tang's presence on the board is a positive for TTM as the company has little experience of running operations in Asia, Harrison said.
The enterprise value of the transaction is about $936 million, TTM said.
The debt being assumed is in the form of a new fully committed bank facility with a syndicate of seven leading Asian banks, it said.
Meadville's PCB business has a strong exposure to China, with the country accounting for 56 percent of its revenue. Its top five customers are Apple (NASDAQ: AAPL - news) , Ericsson (Stockholm: ERIC-B.ST - news) , Huawei, Nokia (Stockholm: NOKI-SEK.ST - news) and ZTE.
TTM's top five customers are Cisco Systems (NASDAQ: CSCO - news) , ITT Corp, Juniper Networks (NYSE: JNPR - news) , Northrop Grumman (NYSE: NOC - news) and Raytheon (NYSE: RTN - news) .
'Together, we will have a more diversified customer base with little overlap, broader end-market exposure, and expanded capabilities to service customers on a global basis,' TTM Chief Executive Kent Alder said in a statement.
'The deal definitely increases TTM's visibility with key large OEMs and the company can become a one-stop shop,' analyst Harrison said.
In the past year, contract electronic manufacturers have been bearing the brunt of increasing competition, rising raw material prices and dwindling demand.
Many companies including TTM resorted to cost-cutting initiatives earlier this year to tackle the crisis.
In September, the company said it would cut 335 jobs at its two California sites and transfer its PCB production to other sites in California, Utah and Wisconsin.
(Reporting by Supantha Mukherjee, John Tilak and Manasi Phadke in Bangalore; Editing by Mike Miller, Anil D'Silva and Unnikrishnan Nair) Keywords: MEADVILLE/TAKEOVER TTM Keywords: MEADVILLE/TAKEOVER TTM Keywords: MEADVILLE/TAKEOVER TTM
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