CHICAGO – The recent softening in some developed economies and a slowdown in China and India have created challenges for companies to pursue strategic investments within the EMS sector, says Lincoln International.

In the second quarter, SMTC acquired Alco Electronics; SigmaTron acquired Spitfire Controls; PartnerTech acquired Aerodyn, and Eolane acquired Groupe Lagasse. The four transactions show a decrease in M&A activity compared to the nine transactions in the previous quarter, says the investment banking firm.

EMS consolidations represented 50% of total activity in the quarter. The continued high level of EMS consolidations and vertical/horizontal convergences suggests electronics companies remain focused on using available cash to build on their core competencies and expand their overall business portfolio, says Lincoln.

In the second quarter one transaction occurred within the US/Canada, or 25% of total transactions, down from four transactions in the region in the previous quarter.

There were two European deals, up from zero in the first quarter. There was a cross-border transaction between high- and low-cost regions (China and Canada), down from two in the previous quarter.

Transactions were divided evenly between the mid tier and small tier.

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