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| Solectron and C-MAC to Combine in $2.7 Billion Stock Transaction |
Combination Creates the Largest, Most Complete EMS Provider With Ability to
Provide Customers With End-To-End Solutions, Including Fully Integrated
Systems
Transaction Expected to Be Accretive to Solectron's Earnings in First Year
MILPITAS, Calif. and MONTREAL, Quebec, Aug. 9 /PRNewswire/ --
Solectron Corporation (NYSE: SLR) and C-MAC (NYSE: EMS; Toronto: CMS) today
announced a definitive agreement under which Solectron and C-MAC will combine
to create a leading diversified designer and manufacturer of integrated
electronic manufacturing solutions. The combination with C-MAC is expected to
enhance Solectron's systems-solutions offerings and expand the company's
portfolio, the most diverse in the electronics manufacturing services
industry.
(Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20001201/SLRLOGO )
Under the terms of the agreement, Solectron will issue 1.755 shares of
Solectron common stock in exchange for each C-MAC common share outstanding.
Based on Solectron's Wednesday closing price of $17.20, the transaction is
valued at $30.19 (C$46.29) per share of C-MAC common stock, or about
$2.7 billion (C$4.1 billion), including the assumption of debt. C-MAC Canadian
shareholders may choose to receive common shares of Solectron or in a
Solectron Canadian subsidiary, exchangeable into Solectron common shares. The
transaction is intended to be a tax-deferred share exchange to shareholders in
Canada who elect to receive exchangeable shares, and will be taxable to U.S.
holders of C-MAC's shares. The boards of directors of both companies have
approved the transaction. Completion of the transaction is subject to
customary closing conditions, including the approval of both companies'
stockholders and regulatory approvals. The transaction is expected to be
completed by the end of calendar 2001.
The transaction provides the following benefits:
-- Complementary high-end technology capabilities. C-MAC's strong
systems-solutions services, including complex full-system and
electromechanical assembly, and optical networking component
fabrication, complement Solectron's comprehensive set of printed
circuit board/advanced packaging and systems-solutions design and
manufacturing offerings. Together the combined organization can now
offer its customers a broader range of services, including fully
integrated systems.
-- Solectron gains access to C-MAC's selective vertical integration
capabilities. This "make or buy" approach captures the benefits of
limited component fabrication while reducing exposure to a highly
leveraged cost model.
-- Additional revenue through cross-selling opportunities across a larger
base of existing customer relationships.
-- Enhanced margin opportunity from high-value services and greater
supply-chain management.
-- Improved competitive position for pursuing high-growth opportunities in
attractive industries, including the fast-growing automotive sector.
-- Additional high-end technology design and engineering expertise and a
full-systems suite of services in networking and communications,
enhancing Solectron's industry leadership position and offerings to
customers in those sectors.
As a result of the transaction, Solectron said it expects to generate an
estimated $60 million to $120 million in synergies through cost savings and
revenue opportunities. The company expects the transaction to be accretive to
fiscal 2002 earnings.
"This is another significant step along our strategic path of providing
the capabilities our customers need to outrun their competition," said
Koichi Nishimura, Solectron chairman, president and chief executive officer.
"C-MAC's systems-solutions expertise helps Solectron meet a key long-range
initiative and further strengthens our industry-leading technology,
manufacturing and supply-chain services. In addition, the transaction provides
us with access to the automotive electronics industry, which we have
specifically targeted for growth."
The transaction expands Solectron's presence, level of business investment
and customer services in Canada. C-MAC has facilities in seven cities in
Quebec, Manitoba and Ontario. Solectron has facilities in Calgary, Alberta,
and Vaughan, Ontario.
Dennis Wood, chairman, president and CEO of C-MAC, will chair a
to-be-formed committee of Solectron's board focused on selective vertical
integration and corporate strategy, and will oversee the integration of the
two organizations. In addition to Wood, Solectron will invite a second current
C-MAC board member to join the Solectron board of directors.
Upon completion of the transaction, Solectron will be in a position to
offer an industry-leading end-to-end solution through key design and
manufacturing capabilities, including high-end micro-technology components,
backplane and PCB fabrication, enclosure design and manufacturing, backplane
and PCB assembly, sub-systems assembly, and full-systems assembly.
"The combination of C-MAC's integrated, selectively vertical Technology
Design Manufacturing Services with Solectron's range of supply-chain services
will create a formidable global leader," Wood said. "With our combined broad
array of technologies, products and services, we will be positioned to offer
customers a complete end-to-end solution to support their global
requirements."
"As our customers' needs evolve at an accelerated pace, we continue to add
capabilities to serve them more effectively and expand our industry
leadership," said Nishimura. "Through this transaction with C-MAC, we add a
very strong leadership team, complementary global capabilities and significant
high-end integrated systems-solutions design and engineering expertise. This
is a great fit for both companies -- culturally and strategically -- as well
as for our customers."
C-MAC Guidance
Given the contemplated transaction between the two companies and the fact
that Solectron has provided revenue and earnings guidance for the upcoming
periods, C-MAC will provide guidance for the remainder of 2001. Order
visibility from C-MAC's customers in the communications end-market is still
limited and difficult economic conditions persist. C-MAC anticipates that
results for the second half of 2001 should be comparable to results for the
first half. At this time, C-MAC expects revenue for the third quarter to
exceed C$575 million and earnings before goodwill amortization per share
diluted to be approximately 10 to 15 cents Canadian.
Webcast
A Webcast regarding this announcement will be held on August 9 at
8:30 a.m. EDT. The Webcast is available at
http://www.videonewswire.com/event.asp?id=303, or by visiting http://www.solectron.com.
Safe Harbor
This release contains both historical and forward-looking statements about
the expectations, beliefs, plans, intentions and strategies of Solectron and
C-MAC. The ability of Solectron and C-MAC to achieve their planned business
objectives involves many risks and uncertainties that could cause actual
outcomes and results to differ materially. In particular, while the companies
have executed a definitive agreement, there is no assurance they will complete
the transaction. If the companies do not receive the necessary government or
stockholder approvals or fail to satisfy conditions for closing, the
transaction will terminate. Forward-looking statements relating to
expectations about future events or results are based upon information
available to Solectron and C-MAC as of today's date. Neither Solectron nor
C-MAC assumes any obligation to update any of these statements, and these
statements are not guarantees of Solectron or C-MAC. In addition to the
foregoing, Solectron's and C-MAC's financial results and product development
could differ materially from current expectations. The factors that may affect
Solectron's and C-MAC's ability to achieve its planned business objectives
include, but are not limited to, the following: 1) the company's revenues and
earnings are subject to a number of factors that make estimation of operating
results extremely uncertain; 2) competition for the company's products is
intense; 3) the uncertainties of whether new products, product extensions or
product strategies will be successful; 4) risks associated with the
acquisition, including (a) conditions in the financial markets relevant to the
proposed transaction, (b) the failure to achieve expected synergies and
efficiencies of operations, (c) risk of price fluctuation, (d) loss of major
customers, (e) the ability to manage business integration, (f) risks
associated with international sales and (g) operations and environmental
regulations; 5) loss of key personnel; 6) litigation, including litigation
over intellectual property rights; and 7) general technological and economic
factors.
The risks associated with Solectron's business are discussed in
Solectron's annual report on Form 10-K for the year ended Aug. 25, 2000, and
in subsequent quarterly reports on Form 10-Q. The risks associated with
C-MAC's business are discussed in C-MAC's Annual Information Form and annual
report on Form 40-F for the year ended December 31, 2000, and in subsequent
quarterly reports to shareholders and reports on Form 6-K. You are encouraged
to read this information carefully.
About Solectron
Solectron (http://www.solectron.com), the world's leading supply-chain
facilitator, provides a full range of manufacturing and supply-chain
management services to the world's premier high-tech electronics companies.
Solectron's offerings include new-product design and introduction services,
materials management, high-tech product manufacturing, and product warranty
and end-of-life support. Solectron, based in Milpitas, Calif., is the first
two-time winner of the Malcolm Baldrige National Quality Award for
manufacturing. In the nine months ended June 1, Solectron had sales of
$15.1 billion.
About C-MAC
C-MAC (http://www.cmac.com) is a leading internationally diversified designer and
manufacturer of integrated electronic manufacturing solutions, from components
to full systems, primarily serving the communications, automotive,
instrumentation, defense and aerospace industries worldwide. C-MAC's services
also include product design, supply-chain management, and assembly and
testing. C-MAC, based in Montreal, has more than 9,000 employees at 52 sites
in North America, Europe and Asia.
Additional Information and Where to Find It
Solectron plans to file a registration statement on Form S-4 in connection
with the combination and plans to mail a proxy statement/prospectus containing
information about the combination. C-MAC plans to distribute a circular to its
shareholders containing information about the combination. Investors and
security holders are urged to read the registration statement, the proxy
statement/prospectus and the circular carefully when they are available. The
registration statement, the proxy statement/prospectus, and the circular will
contain important information about Solectron, C-MAC, the combination, the
persons soliciting proxies relating to the combination, their interests in the
combination, and related matters. Investors and security holders will be able
to obtain free copies of the U.S. documents through the Web site maintained by
the SEC at http://www.sec.gov. Free copies of the proxy statement/prospectus may also
be obtained from Solectron by mail to Solectron Corporation, 777 Gibraltar
Drive, Milpitas, CA 95035, Attention: Investor Relations. Solectron's
telephone number is 408-957-8500. Copies of the circular will be available to
the public on the System for Electronic Document Analysis and Retrieval
maintained by the Canadian Securities Administrators at http://www.sedar.com
In addition to the registration statement and the proxy
statement/prospectus, Solectron files annual, quarterly and special reports,
proxy statements and other information with the SEC. C-MAC files annual and
quarterly financial statements, annual reports, annual information forms,
management proxy circulars and other documents and information with the
Canadian Securities Administrators in Canada and annual and special reports
with the SEC. You may read and copy any reports, statements or other
information filed with the SEC by Solectron or C-MAC at the SEC Public
Reference Rooms at 450 Fifth Street NW, Washington, DC 20549 or at any of the
SEC's other public reference rooms in New York, Chicago and Illinois. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. Solectron's filings with the SEC are also available to the public from
commercial document-retrieval services and at the Web site maintained by the
SEC at http://www.sec.gov. Since January 1997, C-MAC's filings with the Canadian
Securities Administrators are available to the public on the System for
Electronic Document Analysis and Retrieval maintained by the Canadian
Securities Administrators at http://www.sedar.com.
Information Concerning Participants
Solectron, C-MAC and their respective directors, executive officers and
certain other members of management and employees may be soliciting proxies
from Solectron and C-MAC stockholders in favor of combination. Information
concerning the participants in the solicitation will be set forth in the proxy
statement/prospectus.
CONTACT: investors, Thomas Alsborg of Solectron Corporation,
+1-408-956-6614 (U.S.), or thomasalsborg@ca.slr.com; or Claude Michaud of
C-MAC Industries Inc., +1-514-282-3581, or cmichaud@corp.cmac.ca; or media,
Robert (Bob) Kula of Solectron Corporation, +1-408-935-5405 (U.S.), or
robertkula@ca.slr.com; or Donna Pasteris of C-MAC Industries Inc.,
+1-514-282-3609, or dpasteris@corp.cmac.ca.
SOURCE Solectron Corporation
back to topRelated links:
CONTACT:
investors, Thomas Alsborg of Solectron
Corporation, +1-408-956-6614 (U.S.), or thomasalsborg@ca.slr.com;
or Claude Michaud of C-MAC Industries Inc., +1-514-282-3581, or
cmichaud@corp.cmac.ca; or media, Robert (Bob) Kula of Solectron
Corporation, +1-408-935-5405 (U.S.), or robertkula@ca.slr.com; or
Donna Pasteris of C-MAC Industries Inc., +1-514-282-3609, or
dpasteris@corp.cmac.ca. /Photo: NewsCom:
http://www.newscom.com/cgi-bin/prnh/20001201/SLRLOGO AP Archive:
http://photoarchive.ap.org PRN Photo Desk, +1-888-776-6555 or
+1-212-782-2840
