BOSTON, Nov. 17 -- When Ray Sharpe abruptly stepped down as chief executive of Cookson Electronics last May, it opened a huge cans of worms over who was next in line to run one of the world's largest suppliers of electronics assembly materials. Sharpe's departure (he is now chief executive of Isola) was just one of a string of top-level changes: Stephen Howard, chairman of Cookson Group, Cookson Electronics' parent company, had already announced plans to retire.

It took some months, but the pieces are being put back together. One question was addressed in July, when Nick Salmon was named the new chairman. And another was answered in October, as the company promoted Steve Corbett, head of its wildly successful specialty chemistries division, to the top spot.

Since 2002 Corbett has headed Enthone, the $450 million chemicals business Cookson acquired in 2000. In past 12 months, the division's operating profit improved 60%, and return on sales doubled to 13%, from 6% in 2002. Corbett is a Cookson veteran, having previously managed its semiconductor packaging materials and Alpha Metals divisions. (He was also general manager of Heraeus Cermalloy Inc. in the 1980s.) Still, he has his work cut out as he tries to rearrange Cookson Electronics, a $786 million division in 2003 that also includes Polyclad Technologies. In October he spoke with Circuits Assembly's Mike Buetow. Excerpts.

CA: Why do you think you were tapped for this job?

SC: [Laughs] You'll have to ask my boss [Cookson Group chairman] Nick Salmon. My slant is, the process that Cookson Group went through was fairly long. They looked at both internal and external candidates. The decision to bring in an insider was one part of the requirement to have someone who was familiar with the businesses, in order to shorten the learning curve. That, and there is always a desire to promote from within. As far as why me among the internal candidates probably has more to do with the performance of the Enthone business. It has improved significantly in very, very difficult market conditions. This year, the markets are picking up and it's doing even better.

CA: Why has Enthone performed so well?

SC: Enthone has gotten healthier through organizational changes. I structured the business under a global structure, which allowed us to focus efforts in R&D on the right markets, the right regions, and the right products, as opposed to parochial R&D organizations that were focused on the U.S. and Europe. Now we're launching more products per unit of time and taking those products into high growth areas like Asia much more quickly.

CA: Your predecessor, Ray Sharpe, was following a one-stop shopping strategy. The announcements, with Polyclad having a direct line to Nick Salmon, suggest a different approach.

SC: There's a lot of discussion over Polyclad and I wouldn't read too much into that. The reality behind the laminates business reporting to Nick, if you look at the financial analyst community and you didn't know better you would conclude that the only thing Cookson has is laminates. Precious Metals, Ceramics - our other businesses - get very little press. There's this fever over [Polyclad]. To answer the analysts, Nick felt he needed to have firsthand knowledge of what was going on, and firsthand influence over the business. He felt he wouldn't be comfortable talking to the financial community if he didn't walk the talk. This period where Nick will manage it will not be one of long duration. As for the one-stop shopping, we're going to do what our customers value. I'm not going to say that none of our customers value it, but I will say that's not a common thread in our marketplace. Our customers want the best technology, at the best price point. That's not always Cookson's strong point where it touches the customer. That's probably the fundamental difference between our philosophies: I'm not going to push it where it doesn't fit.

CA: So will we see changes to sales and distribution?

SC: Probably no specific changes in sales and distribution. For board fabrication, for example, Enthone is the sales arm for Alpha products like solder for HASL. Alpha makes them, Enthone sells them; [Enthone is] the touch point for that market. In some parts of the world, Enthone sells laminate because it's the proper customer base. Much of business is relationship driven, and so we want to build on that when it's there.

CA: Jason Maupin, speaking at TMRC in October, advocated the principles of TASTE - truth accountability, support, trust, enthusiasm. Is this a mantra at Enthone, and will it be worked into the broader Cookson Electronic culture?

SC: It is one of the principles of Enthone. I think we've got good businesses. We need something like that to show people they are working for a top-shelf organization.

CA: Who will succeed you at Enthone?

SC: [Laughs] Are you looking for a job? We just started the succession process. We have a number of candidates. I hope I have enough internal candidates.

CA: Are any other changes expected in the management ranks, at Alpha or Polyclad?

SC: No short-term plans.

CA: Is Polyclad being packaged for a possible sale?

SC: It's no secret that the laminates business is hurting. Polyclad is doing well in Asia. We're treading water in Europe and suffering in the U.S. That business needs to be fixed. I would put the prospects of a sale as pretty low. Cookson doesn't have the appetite to take another haircut like they did on Speedline. Everything is for sale at the right price, of course. If someone offered us $1 billion for Polyclad, it would be looked at.

CA: What's your top priority right now?

SC: We're in the middle of our budgeting process for 2005. I worked at Alpha and am comfortable in assembly materials space. Even though Polyclad reports to Nick, I'll handle the budgeting process for Polyclad. Also, I'll travel the world of Cookson, listening to employees and customers and trying to develop a plan. I certainly want to go back and touch ground zero and reassure myself that the existing strategic plans are sensible and I can see where the lines intersect between customers and our plans.

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CHICAGO, Nov. 17 -- EMS merger and acquisition activity rose in the third quarter, according to an investment bank that tracks the sector.

There were 14 M&A deals finalized in Q3, reports Lincoln Partners, a Chicago-based investment bank. This exceeds the 13 deals completed in the June quarter and 12 in the March quarter.

It was the most third-quarter transactions since 2000, when 28 deals were completed, Lincoln Partners said. There were 10 deals done in Q3 2003.

Companies of over $3 billion in annual revenues accounted for half the completed transactions. The other half were conducted by firms with revenues under $400 million, Lincoln Partners said.

Among the major deals:

• Flextronics agreed to buy Nortel's manufacturing operations.
• Creation Technologies acquired EMS firm Second Source System.
• SigmaTron bought the remaining 57.5% of SMT Unlimited.
• Celestica sold its Power Syetems business.
• Neways Electronics acquired Stork Electronics.
• Flextronics purchased Sheldahl, a maker of flex laminate and PCBs.

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MILWAUKEE, Nov. 17 -- Perhaps the best-known analyst and proponent of the EMS sector on Wall Street is calling it quits. After 16 years of recommending stocks of contract assemblers, J. Keith Dunne is retiring at year-end to spend more time with his wife and young sons.

For the past three years Dunne has been a sell-side analyst with RBC Capital, an investment banking firm. He came to fame as a managing director of Robertson Stephens in the 1990s, a firm that fueled scores of high-tech companies and handled dozens of mergers and acquisitions. Robertson Stephens later collapsed and was sold.

Often cited by Wall Street publications for his accuracy, Dunne was in 2001 voted an Atomic Giant by PC FAB magazine (now PCD&M) in recognition of his influence on the industry.

In a statement today, Dunne said thanked the industry. "I immensely enjoyed watching the electronics manufacturing products and services industry take shape and am thankful for the opportunity I had to participate in its growth and development through strategic talks with many of you, and by educating investors on the investment merits of the EMPS industry."

Dunne gave a promising forecast for the future. "I believe the EMPS industry should continue to outperform the overall Nasdaq and a group of leading technology hardware companies for several more years.

Since Dunne initiated coverage in mid 1996:

• Quarterly sales have grown from $4 billion to $15.2 billion, a CAGR of 36%.
• Over 400 OEM asset divestitures and business acquisitions have been completed.
• Market capitalization has increased from $6.5 billion to $30.5 billion, a CAGR of 20% vs. 7% for the Nasdaq..

Amit Daryanani will take over Dunne's practice at RBC.

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RADFELD, Austria, Nov. 17 - A pair of leading semiconductor gear makers, BE Semiconductor Industries and Datacon Technology, will merge in January, the firms jointly announced today.

Besi will assume 100% of Datacon's shares. Datacon shareholders will receive 90% cash and shares in Besi. The purchase price was 3 million euros and includes net financial liabilities.

Negotiations are in the final stages, the companies said, and the merger is scheduled to close in January, pending antitrust and other reviews. Besi is listed on Nasdaq and Euronext. After the close, Datacon will become an wholly owned subsidiary of Besi.

Datacon makes microchip assembly platforms (die bonders), while Besia manufactures semiconductor assembly equipment.

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