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SAN JOSE – Rumors abound that Flextronics may be eyeing Sanmina-SCI for a possible acquisition, although neither company is talking.
As policy, neither company will comment on merger or acquisition talks. Sanmina-SCI’s board did recently initiate a proposal to buy back outstanding shares of the company’s stock in a reverse split of three to 10 shares, a move typically taken to boost stock price and ward off hostile buyers. Sanmina-SCI has seen its share price spend much of the year hovering just above the minimum $1 average per share required for continued listing by the Nasdaq exchange, and may be taking measures to give the company more breathing room.
That said, Sanmina-SCI has become a more viable entity over the past year, as it has rung up net profits in three of the past four quarters, and sold off its margin-challenged PC manufacturing business.
In doing so, the company has regained some of its financial footing, garnering $10.5 billion in sales last year, good for fifth among EMS/ODM firms. Gross margins and inventory turns have steadily climbed as well. The company’s most recent fiscal year ended Sept. 29.
Moreover, Flextronics and Sanmina-SCI share some common offerings, such as bare board fabrication and enclosures, and in the event of a merger could potentially shutter some of these operations to improve margins and capacity utilization.
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