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Kitron has entered into an agreement with API Technologies Corp. to acquire its EMS division in the United States. The acquisition marks a substantial strengthening of Kitron's position in the US market.
"The transaction will significantly strengthen our position in the US market, particularly within the defence industry. Important customers have wanted us to expand our presence in the US, and we think this is a great opportunity to do so," said Peter Nilsson, CEO of Kitron.
The operations of the EMS division are highly complementary to Kitron's existing operations and are expected to provide added value to current operations, in particular in the United States. The division's main focus is on defence, aerospace, medical/industrial, and communications/consumer, and it is well aligned with Kitron's overall strategy. The business is located in Windber, Pennsylvania, close to Kitron's current US facility in Johnstown, Pennsylvania, with approximately 100 employees operating a total of six production lines and a facility of approximately 10 000 square meters. Total revenues in 2017 amounted to approximately $30 million.
"We have studied this business carefully over time and see great potential for integrating the API EMS division with the Kitron group, having EMS as its core business. It has a very interesting customer base, a promising order book and a highly skilled staff. We expect the division to generate an operating profit on a stand-alone basis going forward, and see substantial potential for further profitability improvements by joining forces with Kitron and increasing utilization," Nilsson said.
The purchase price is $15.9 million in cash, equal to net asset value, which is financed through existing bank arrangements. Closing is expected to take place in the first quarter of 2019, subject to necessary governmental approvals. Kitron expects the transaction to be earnings neutral in 2019 and earnings enhancing in 2020 and beyond.
Kitron is one of Scandinavia's leading electronics manufacturing services companies for the energy/telecoms, industry, defense, medical devices and offshore/marine sectors. The company is located in Norway, Sweden, Lithuania, Germany, China and the United States. Kitron had revenues of approx. NOK 2.4 billion in 2017 and has about 1,450 employees.