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Solectron to Buy C-Mac for $2.7 Billion

IN BRIEF / TECHNOLOGY

August 10, 2001|Bloomberg News

Solectron Corp., the biggest maker of electronics for brand-name companies, agreed to buy C-Mac Industries Inc. for $2.7 billion in stock and an unspecified amount of debt to boost sales to auto makers and add design expertise.

Solectron will exchange 1.755 shares for each of C-Mac's, valuing the company at $30.19 a share, or 33% more than Wednesday's closing price.

Solectron fell as much as 15% on investor concern that the purchase makes the company more reliant on Nortel Networks Corp., C-Mac's biggest client, amid low demand for networking gear.

Solectron said it will save $60 million to $120 million by combining the two companies, and it expects the purchase to boost earnings in fiscal 2002.

The company also said it will take a fourth-quarter restructuring charge of as much as $210 million in addition to a $50-million charge announced in June. It also expects a charge of about $58 million related to credit and other costs.

Shares of Montreal-based C-Mac jumped $3.58, or 16%, to close at $26.25, and Milpitas, Calif.-based Solectron fell $1.71 to $15.49, both on the NYSE.

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