Circuits Assembly Online Magazine - Kitron to Acquire EMS Division of API Technologies

BILLINGSTAD, NORWAY – Kitron has entered into an agreement to acquire the EMS division of API Technologies for about $16 million in cash.

The deal will expand the Norwegian assembler's footprint in the US to two facilities. Kitron did not indicate whether it would keep both plants open.

Kitron said in an announcement it would pay $15.9 million in cash for the EMS unit, equal to net asset value and financed through existing bank arrangements. Closing is expected to take place in the first quarter of 2019, subject to governmental approvals. Kitron expects the transaction to be earnings neutral in 2019 and earnings enhancing in 2020 and beyond.

"The transaction will significantly strengthen our position in the US market, particularly within the defense industry. Important customers have wanted us to expand our presence in the US, and we think this is a great opportunity to do so," said Peter Nilsson, CEO, Kitron.

In the announcement, Kitron called API's EMS operations "highly complementary" to Kitron's existing operations. The division's main focus is on defense, aerospace, medical/industrial, and communications/consumer, and it is aligned with Kitron's overall strategy. The API business is located in Windber, PA, close to Kitron's facility in Johnstown, PA, with approximately 100 employees operating a total of six production lines and a facility of approximately 108,000 sq. ft. Total revenues in 2017 amounted to approximately $30 million. The acquisition pushed Kitron's annual run rate to close to $350 million.

"We have studied this business carefully over time and see great potential for integrating the API EMS division with the Kitron group, having EMS as its core business. It has a very interesting customer base, a promising order book and a highly skilled staff. We expect the division to generate an operating profit on a stand-alone basis going forward, and see substantial potential for further profitability improvements by joining forces with Kitron and increasing utilization," Nilsson said.