Printed circuit board and contract manufacturing services provider Solectron Corp has acquired Smart Modular Technologies Inc for roughly $2bn in stock. Smart is a designer and manufacturer of memory modules and memory cards, embedded systems and I/O products based in Fremont, California. Solectron says the acquisition is effectively the largest ever in the electronics manufacturing services industry. Separately Monday, the company reported strong year-end financial results.
Terms of the deal call for Milpitas, California-based Solectron to pay Smart shareholders 0.51 shares for each Smart share held. Solectron will issue roughly 23.1 million shares of common stock and assume all stock options held by Smart employees. The transaction will be accounted for as a tax-free pooling of interests.
After closing, Smart will operate as part of Solectron’s newly- formed technology solutions business unit, which will include the company’s other design groups and will provide memory modules, embedded board and systems, communications devices and PC/server devices. Solectron reckons the acquisition will be accretive to earnings in fiscal 2000 by about $0.09 per share, before one-time charges.
The deal will bring Solectron 1,900 new employees and 290,000 square feet of manufacturing capacity in the US, Puerto Rico, the UK and Malaysia, as well as design centers in the US, India and the UK. Merrill Lynch acted as financial advisor to Solectron for the deal, while Morgan Stanley and Warburg Dillon Reed advised Smart.
Meanwhile, Solectron reported fourth-quarter results that edged out expectations, with net income up 58.9% at $88.8m on revenue up 41.5% at $2.39bn. Earnings per share rose 43.5% to $0.33, beating the First Call consensus by a penny. For the full year, net income rose 47.8% to $293.9m on revenue up 58.7% at $8.39bn, while earnings per share rose 37.8% to $1.13.
