Benchmark Electronics Inc. will expand its global footprint in Thailand and the United Kingdom with plans to purchase two plants from debt-laden ACT Manufacturing Inc.
The U.S. Bankruptcy Court in Massachusetts on Tuesday approved Benchmark's bid to acquire the stock of ACT Manufacturing Thailand Public Co. Ltd. and ACT Manufacturing UK Ltd. in Leicester, England, for $45.2 million. Benchmark, an Angleton, Texas, EMS company will assume $15 million of ACT's debt as part of the transaction.
ACT, a Hudson, Mass., EMS provider filed for Chapter 11 bankruptcy protection last year.
The deal, which is expected to close this month, will give Benchmark new customer relationships in the industrial controls, medical and telecom sectors. The agreement is part of the company's strategy to increase its presence in low-cost Asia. Benchmark currently operates a volume production facility in Singapore. ACT's Leicester plant will give Benchmark its fourth European location. The midtier contractor has plants in Cork and Dublin, Ireland, and East Kilbride, Scotland.
"Both Benchmark and ACT have very customer-focused cultures," said Cary Fu, Benchmark's president and chief executive, in a statement. "We welcome our new customers, employees and suppliers. We are committed to achieving a smooth transition."
Analysts believe the new plants could contribute between $180 and $200 million to Benchmark's annual revenue."We expect Benchmark will get approximately a half a quarter contribution in the September quarter or $25 million in revenue," said Thomas A. Hopkins, an analyst at Bear, Stearns & Co. Inc., New York. "The purchase price will be funded through Benchmark's current available cash and will not require the company to utilize its [credit] revolver, which was paid down to zero in the December quarter."
In other company news, Benchmark executives said the company would exceed analysts' consensus estimates for its second quarter. Benchmark expects its second quarter to generate revenue in the $380 to $390 million range along with earnings between 29 and 31 cents per share. Consensus estimates from analysts forecast revenue of $339 million and 26 cents earnings per share for the second quarter.
Benchmark executives anticipate the company's third quarter revenue will be flat due to the acquisition of ACT's facilities.