Tag Archives: Merix

Viasystems, 15 Years Later

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This fall marks the 15 year anniversary of Viasystems. Who woulda thunk it?

When Hicks, Muse, the investment firm behind the PCB manufacturer, first hit the scene, in fall 1996, it quickly made a statement like no other in our industry, before or since. In quick succession, they snagged AT&T’s board shop in Virginia, Circo Craft, Kalex, Forward Group, ISL, Mommers and Zinocelere, plus several EMS and peripheral businesses. Longtime shop owners stood in line, waiting to be bought out.

When things crashed in 2001, it looked for a while Viasystems couldn’t hold up. Debt was over $1 billion. Bankruptcy beckoned.

But David Sindelar, the company’s original CFO who was named chief executive in July 2001, has turned things around. Such stories aren’t as common as we might hope in the PCB industry, where high capital investment and maintenance costs and severe pricing pressure make life excruciating for even the handful of companies that don’t misstep. It’s an industry that doesn’t easily forgive mistakes.

Now, as he approaches 10 years on the hot seat, Viasystems is profitable and it’s long-term debt is down to $215 million, even after its high profile acquisition of Merix. Sanity has returned; Hicks, Muse’s influence is nowhere to be seen.

It’s a great, albeit unlikely, story.

Board Buying Bonanza?

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Here we go again?

DDi today proposed acquiring Coretec, a move that would close the gap between the California-based DDi and its quickturn rival, TTM Technologies.

It also marks the second potential M&A deal between “brand-name” board fabricators in the past four weeks. Earlier this month, Viasystems announced a pending acquisition of Merix.

Unlike the Via-Merix deal, while the impact wouldn’t be big in terms of the worldwide PWB fabricator rankings — likely boosting DDi from the low 60s to the top 50s in terms of size — it could change the pricing model for many board shops. DDi and Coretec have both invested heavily in HDI capability and have complementary markets (defense, telecom, quickturn/prototypes). It also would give the merged company a footprint in each of the continental US time zones. DDi had fiscal 2008 revenues of $190 million, while Coretec closed the year at C$81 million.

It strikes me that Coretec’s announcement late Friday that it would seek a cash infusion through the sale of 10 million shares of common stock was all the opening DDi needed to pull the trigger, especially given the relatively low market capitalization of Coretec.

This would be DDi’s first acquisition since its purchase of Sovereign Circuits in October 2006. DDi, of course, often made headlines in the last 1990s and 2000 as it bought company after company, building a PWB operation that once ranked among the top 20 worldwide. Simultaneously, Viasystems was doing much the same, only for both companies to hit the skids during the 2001-03 tech recession.

Today’s announcement makes sense, given the relatively cheap price DDi would have to pay to get Coretec. Whereas today’s headlines have certain echoes of 2000, it’s highly unlikely the risk of fallout is anywhere close.