Ducommun--the oldest continuously operated company in California--said Monday that it has agreed to divest three financially struggling electronics divisions that accounted for 85% of last year's sales in a deal valued at $130 million.
Included among the divisions to be sold to Arrow Electronics of Melville, N.Y., is Ducommun's Kierulff Electronics unit, the fourth-largest electronics distribution company in the country. Both Ducommun and Kierulff are based in Cypress.
Arrow, the nation's second-largest electronics parts distributor, has agreed to acquire Ducommun's three electronics businesses: Kierulff, Ducommun Data Systems and MTI Systems Corp. by issuing stock valued at about $40 million to Ducommun shareholders and to assume about $90 million in Ducommun debt.
Ducommun, which moved its corporate headquarters to Orange County from Los Angeles in 1986, has been beset by nagging financial problems and chronic management turnover in recent years. The company lost a combined total of nearly $39 million in 1985 and 1986 and has fired two presidents in two years.
FOR THE RECORD
Los Angeles Times Wednesday September 23, 1987 Home Edition Business Part 4 Page 2 Column 6 Financial Desk 2 inches; 41 words Type of Material: Correction
MTI Systems, one of three businesses to be sold by Ducommun of Cypress to Arrow Electronics of Melville, N.Y., has generated consistent profits and experienced significant growth in recent years. An article in Tuesday's Times incorrectly characterized MTI as a "struggling" operation.
Ducommun "views this consolidation as the most effective way of enhancing shareholder values for the distribution segment of our operation," Wallace Booth, Ducommun's chairman, president and chief executive, said in a prepared statement.
Wall Street reacted enthusiastically to the announcement. Ducommun stock closed Monday at $18, up $1.625 in trading on the American Stock Exchange. Arrow stock closed unchanged at $9.75 on New York Stock Exchange.
The sale will result in a much smaller and very different Ducommun.
The company's electronics businesses accounted for 85%--or $386.6 million--of Ducommun's 1986 revenue of $455.2 million. Those businesses also employ about half the company's 2,500 workers, company officials said.
Ducommun is retaining three aerospace services units--AHF-Ducommun, Aerochem, and Jay-El Products--and a cable manufacturing division, Tri-Tec Engineering.
The four operations generated 1986 sales of $68.5 million.
In 1986, Ducommun management embarked on a restructuring program designed to return the company to profitability. The company reported earnings of $785,000 for the second quarter of 1987.