RAD Electronics - Press Release

EMS Deal Zeal Still Hot
New contract manufacturing maneuvers surface

EWS: January 29, 2001

By Bernard Levine

All the talk of a possible business slowdown hasn't dampened the contract manufacturing world's enthusiasm for new acquisitions, partnering deals, and other maneuvers.

Among the latest developments are a new Solectron Corp. acquisition, a partnering deal between SCI Systems Inc. and Cadence Design Systems Inc.'s Tality Corp., the opening of a USI Manufacturing Services Inc. facility in Silicon Valley, and the establishment of a new contracting entity by a team of distribution industry veterans led by William C. (Bill) Cacciatore.

Solectron Corp., Milpitas, Calif., and CentennialTechnologies Inc., Wilmington, Mass., entered into a definitive merger agreement for theelectronic manufacturing services (EMS) industry leader to acquire Centennial (nasdaq: CENL) in a deal valued at around $108 million. Solectron (nyse: SLR)will gain Centennial's design, manufacturing and marketing capabilities, which include memory module and memory card solutions based on SRAM and flash technologies for telecommunications, data communications, mobile computing and medical markets. Centennial will operate under Solectron's Technology Solutions Business Unit, which currently includes Smart Modular Technologies Inc. and Force Computers Inc. The transaction will be accounted for as a purchase and is expected to close during the second quarter.

"We are excited by the opportunity to strengthen our flash memory module and PC card businesses," said Ajay Shah, president and chief executive officer of the Technology Solutions Business Unit. L. Michael Hone, president and CEO of Centennial, said the agreement gives his customers access to Solectron's substantial financial resources, global reach and technological capabilities.

Solectron will assume responsibility for Centennial's manufacturing facility and corporate headquarters in Wilmington, and sales and service offices in the United States and United Kingdom, offering employment to more than 140 Centennial manufacturing, sales, engineering and related support personnel.

SCI Systems Inc. (nyse: SCI), Huntsville, Ala., and Tality, a subsidiary of Cadence (nyse: CDN), San Jose, signed a partnership agreement to jointly provide customers in wired and wireless communications an integrated path from product concept to volume production.

The companies hope to optimize technical interfaces between the various phases of the product development process by establishing integration teams, deploying standardized collaborative manufacturing commerce solutions, materials requirements planning systems, design environments, design flows, and project management tools. They also plan to co-locate certain SCI strategic, New Product Introduction centers with Tality design centers to provide turnkey engineering and prototyping solutions.

Meanwhile, USI Manufacturing Services Inc., which has ties to Taiwan contractor USI Inc. and packaging, assembly and test house ASE Group, today is announcing the official opening of its EMS center in Morgan Hill, Calif. The $10 million, 32,000-square-foot center will design, manufacture assemble and test prototype communications, computer and consumer systems. And finally, investors led by Cacciatore, former chairman, CEO and president of distributor Richey Electronics, now part of Arrow Electronics Inc., Melville, N.Y., have acquired RAD Enterprises in Simi Valley, Calif. The name has been changed to RAD Technologies LLC.

Key investors and operating managers are former executives of Richey Electronics and RAD Enterprises. Cacciatore will act as board chairman.

"Our group has been searching for a core business upon which could be built a substantial contract manufacturing business. We found that company in RAD Enterprises, a company specializing in the manufacturing of complex PCB assemblies, custom cable assemblies and electronic sub-assemblies," Cacciatore said. "Under the capable leadership of Chuck Mann (former vice president and director of manufacturing operations for Richey, now CEO of RAD Technologies), we plan to aggressively expand the company through strong internal growth coupled with an aggressive acquisition strategy. Subcontract outsourcing continues at an accelerated pace. We intend to be a major part of this exciting business opportunity."

Copyright © 2001 Cahners Business Information, A Division of Reed Elsevier, Inc.

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