Rueil-Malmaison, France, March 23, 2004 – Pursuing its strategy of targeted acquisitions, Schneider Electric has decided to acquire California-based Kavlico Corporation, a Solectron Corporation (NYSE: SLR) company. Kavlico is a major player in the sensing technology market with sales of $156 million for the fiscal year ending August 2003.
Components for repetitive machine builders is one of the growth platforms identified and declared by Schneider Electric in markets adjacent to its core historical offering in electrical distribution and automation & control. This platform already includes Crouzet Automation. Both companies will strongly benefit from their respective market positions and technologies. The global sensors market is estimated at $35 billion, of which $21 billion is sold to machine builders for repetitive applications (cars, trucks, vending machines, elevators, etc). Average growth in this segment stands at +6% to +8% a year, driven by increasing demand for security, performance, energy savings, environmental protection and comfort.
Kavlico: A technological leader with a solid financial performance
- Well established leader with preferred supplier status in the US and significant development potential in Europe.
- A winning strategy combining industry and product expertise:
> Strong positions in key end-user markets (automotive, aerospace and industrial)
> Technology leadership with strong capabilities in the four major sensing technologies: ceramic, piezoresistive, single-chip micro-machined (MEMS) and differential transducers
> Demonstrated capabilities both in high volume sensors and lower volume tailored sales
- Impressive track record of growth and solid profitability:
> A 9%-plus compounded annual growth in sales over the past fifteen years
> Resilient 10%-plus operating margin during the recent economic downturn with significant improvement potential in a more favorable operating and economic environment
- Experienced and successful management in place since 1986, highly skilled and motivated to lead Schneider Electric’s future development in sensors.
Supporting Schneider Electric’s growth strategy
Henri Lachmann, Chairman and CEO of Schneider Electric, commented: “This acquisition of a company with an outstanding track record and advanced technology is a significant breakthrough for us in a growth area adjacent to our core business, as defined in our strategy. The sensors market is a natural expansion of Schneider Electric’s competencies in repetitive machines and a perfect complement to the existing sensing activities of Schneider Electric and Crouzet. We are highly confident in the ability of Kavlico’s management to support Schneider Electric’s future expansion as a leading specialist in the attractive sensors market.”
Solectron, a leading provider of electronics manufacturing and integrated supply chain services, is selling Kavlico as part of a previously announced plan to sell certain assets that are not central to its future strategy. Subject to regulatory approvals, Schneider Electric will pay $195 million in cash for 100% of Kavlico’s shares and will acquire the company free of debt or cash. In accordance with Schneider Electric’s acquisition criteria, the transaction is consistent with a Net Operating Profit After Tax return above Schneider Electric’s Weighted Average Cost of Capital in three years. The transaction will be accretive on net earnings after goodwill amortization as from the second year, prior to any synergies.
About Kavlico Corporation
Kavlico Corp. (www.kavlico.com) provides innovative sensing solutions for pressure, position, force, level, tilt and other specialty measurements. Millions of Kavlico sensors perform critical sensing operations on a daily basis worldwide. Kavlico sensors are primarily designed for high-volume, OEM applications for use in the automotive, aerospace, fluid power, HVAC/R, power generations, marine, medical, process control and On & Off-Highway diesel engine market sectors.
Kavlico Corp. has 1,300 full-time employees worldwide, and manufacturing facilities in Moorpark, California (ISO 9001 and QS-9000 registered) and in Germany for European customers, and sales offices in California, Michigan, the UK, Germany, Sweden and France. Founded in 1958, the company enjoys a strong reputation and the status of preferred supplier in each of its key markets with prestigious customers.
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Schneider Electric is the world’s power and control specialist. Through its world-class brands, Merlin Gerin, Square D and Telemecanique, Schneider Electric anticipates and satisfies its customers’ requirements in the residential, buildings, industry and energy and infrastructure markets. With 74,814 employees, Schneider Electric generated sales of euros 8.7 billion in 2003 through 13,000 sales outlets in 130 countries.