CHATSWORTH, CA – Natel Engineering will acquire OnCore Manufacturing in a $275 million deal that will create an EMS company with revenues of about $770 million.
The companies announced the deal, technically a merger, this morning. The deal is expected to close within a month.
The combined company will become the largest privately held EMS company in North America, with 13 manufacturing locations, approximately 3,750 employees, and annual revenue of approximately $770 million. The revenue is higher than Canada's Creation Technologies, whose sales are in the $500 million range.
The combined entity would be the 25th largest EMS company in the world, based on CIRCUITS ASSEMBLY data.
“This is a compelling strategic combination that creates a market-focused leader in the high-reliability mid-tier EMS space,” said Sudesh Arora, Natel president and chief executive. "The merger of OnCore and Natel provides an excellent value for our customers and exciting new opportunities for all employees,
“Both Natel and OnCore have pursued successful strategies to grow their respective businesses and we are excited to bring these two companies together. We are highly complementary organizations and our combined value proposition will deliver competitive advantages for our customers,” said Sajjad Malik, OnCore's chief executive.
Malik is expected to join the board of the merged companies.
The merged entity's largest customer makes up 13% of pro forma sales and has been a customer for less than five years, Moody's estimates. Natel's top ten customers represent over 50% of pro forma revenues.
Natel financed the $275 million acquisition through a $280 million senior secured term loan and a $60 million seller note from Charlesbank, the owner of OnCore. The loans also went to refinance existing Natel debt. Moody's listed the purchase at about a 7.5 times multiple.
Natel has been public about its goal of reaching $1 billion in revenue by 2023. The company made a major step in that direction with its acquisition in late 2013 of Epic Engineering Technologies. That move pushed its annual revenues to an estimated $375 million for 2013.