Sheldahl, Inc. and International Flex Technologies, Inc. (IFT) today said they have completed the previously announced merger of the two companies. Sheldahl also has replaced Edward Lundstrom as its chief executive officer.
Sheldahl has appointed Donald R. Friedman as its CEO, replacing Lundstrom, who has resigned from the Company. Friedman previously held the position of CEO at IFT.
Sheldahl will operate under its current name with IFT as an operating subsidiary. Sheldahl will continue to be listed on the Nasdaq National Market and trade under its current stock symbol.
Also in connection with the merger, Morgenthaler Partners, Ampersand Ventures and Molex Incorporated have each completed their equity and debt investments in the company.
Sheldahl is a producer of high-density substrates, flexible printed circuitry, and flexible laminates primarily for sale to the automotive electronics and data communications markets. The company, which is headquartered in Northfield, Minnesota, has operations in Northfield: Longmont, Colorado; South Dakota; Toronto, Ontario, Canada; and Chihuahua, Chih., Mexico.
IFT is a producer of fine-line flexible circuits for the electronics, data communications and medical markets. The company, now a division of Sheldahl has operations in Endicott, New York.
The acquisition terms were restructured earlier this month. Originally, Sheldahl was to have issued approximately 7.6 million shares of common stock, while Morgenthaler Partners, IFT's majority shareholder, and Ampersand Ventures was to have invested $25 million in equity capital in exchange for approximately 4.9 million shares of Sheldahl common stock and shares of a new series of Sheldahl preferred stock that is convertible into approximately 4.1 million shares of Sheldahl common stock.
In addition, Molex Inc., a Sheldahl customer and joint venture partner, had agreed to join with Morgenthaler and Ampersand in committing to purchase up to an aggregate of $15 million of Sheldahl subordinated debt and warrants. If Sheldahl had issued the full $15 million of notes, it would have issued warrants to the note holders to purchase approximately 2.3 million shares of Sheldahl common stock.
As a result of these transactions, Morgenthaler, other IFT stockholders and Ampersand would have collectively held securities representing ownership of approximately 49% of Sheldahl on a fully diluted basis (assuming conversion of all Sheldahl convertible securities). In addition, Molex was to have increased its ownership of Sheldahl securities and, after participation in these transactions, would now have owned approximately 10% of Sheldahl on a fully diluted basis.
Under the restructured agreement, announced December 19, Sheldahl will issue approximately 9.7 million shares of Sheldahl common stock in exchange for all outstanding equity securities of IFT and will assume approximately $12.7 million in IFT debt.
Morgenthaler and Ampersand will invest $25 million in equity capital in exchange for approximately 9.8 million shares of Sheldahl common stock and shares of a new series of Sheldahl preferred stock that is convertible into approximately 8.1 million shares of Sheldahl common stock. Molex will join Morgenthaler and Ampersand in purchasing an aggregate of $6.5 million of Sheldahl subordinated debt and warrants to purchase approximately 1.5 million shares of Sheldahl common stock
As a result of these transactions, Morgenthaler, other IFT stockholders and Ampersand will collectively hold securities representing ownership of approximately 58% of Sheldahl on a fully diluted basis (assuming conversion of all Sheldahl convertible securities). In addition, Molex will own approximately 7% of Sheldahl on a fully diluted basis.
The new Board of Directors will include three of the current directors of Sheldahl, three designees of Morgenthaler, Ampersand and IFT, and one representative from Molex.
The announcement of the revised terms came at the same time Sheldahl disclosed weak sales for the first quarter ended December 1, 2000.
"The improved liquidity afforded by our investment partners clearly paves the road for us to finish the development and commercialization of our new products while we simultaneously grow the Core Business and improve profitability," Lundstrom said at the time. "Sheldahl's Board and I fully support these transactions. We believe this is in our shareholders' best interests and provides for the best opportunities for growth and advancement for our employees."