SPOKANE VALLEY, WA -- Key Tronic has signed a letter of intent to acquire CDR Manufacturing, Inc. (dba Ayrshire Electronics) for $46.9 million in cash.

The letter of intent includes a 75 day exclusivity period for completion of due diligence and negotiation of the definitive agreement.

The acquisition, if consummated, is expected to be immediately accretive to earnings. Key Tronic expects to finance the transaction with cash on hand and a term loan from Wells Fargo, and anticipates the transaction to be completed during the first quarter of fiscal 2015.

CDR has annual revenue of approximately $120 million and provides printed circuit board assembly and other EMS services to a diversified customer base, including a number of large multinational companies. It operates manufacturing facilities in Minnesota, Arkansas, Mississippi, Kentucky and Mexico. 

"The planned acquisition of Ayrshire would represent a major step forward for Key Tronic, significantly expanding our printed circuit board assembly capabilities and extending our customer base with new multi-national companies," said Craig Gates, president and chief executive officer.

The acquisition will push Key Tronic into the top 40 of EMS companies worldwide. Key Tronic had $323.9 million in sales in calendar 2013, just shy of Top 50 D-Nikko Engineering's $328.3 million.

The fate of Ayrshire has been in limbo since the passing of its founder and chairman, Milo Bryant, last year.

The letter of intent is not binding on either party and the proposed acquisition is subject to Key Tronic's completion of its due diligence, the negotiation and execution of definitive agreements relating to the proposed acquisition, and final approval of Key Tronic's financing for the transaction, among other things.