DDi Invests in Core PCB Operations

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ANAHEIM, CA DDi Corp. announced two transactions designed to boost its PCB engineering and manufacturing services sale of their assembly business and acquisition of Sovereign Circuits, Inc., from North Jackson, Ohio. The company has also implemented a series of related changes in 2006 to improve capital structure, divest certain European operations, and refocus management.

DDi will divest its assembly business sector to San Diego, Calif.-based Veritek Manufacturing Services LLC. The sale is expected to cost Veritek $12.0 million in cash. The DDi assembly business netted unaudited sales of $15.6 million for the six-month period ending June 30, 2006, and $31.1 million for 2005, with 13% and 10% gross margins, respectively. DDi intends to continue servicing the PCB requirements of current assembly customers, said Mikel Williams, president and CEO, DDi.

The second major adjustment involves acquiring Sovereign Circuits through a merger agreement. DDi will acquire outstanding company stock for $14.8 million, and anticipates paying up to $5.7 million in cash, with the remainder in stocks. Sovereign Circuits offers rigid, flex, and rigid-flex PCB products for military and other high-reliability markets. These are desirable markets for DDi, explained Williams, as they are less vulnerable to offshore competition. Williams also cited a corporate strategy of eliminating lower-margin, non-core businesses, and investing in core capabilities, as the company's motivation for these major changes.

DDi's Board of Directors approved both transactions this month. Each deal is subject to customary closing conditions.



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