Thayer Capital Partners and BLUM Capital Partners has once again teamed up with their latest $225 million investment in K*TEC Electronics Corp., a subsidiary of Kent Electronics Corp. and a provider of vertically integrated electronic manufacturing services. Thayer Capital invested 60% of the equity with BLUM contributing 40% alongside a $50 million senior secured note provided by the investors. Donaldson, Lufkin & Jenrette advised the seller on the transaction. Thayer and BLUM Capital will have six representatives on the company’s board of directors.
“Thayer and BLUM have been looking for opportunities in the electronic manufacturing service industry and this was an opportunity that has been visited once before over the past year,” said John Walker, a partner at BLUM Capital. “The parent company was once again motivated to move forward with the transaction and it was also a good time for us to pursue it. The company had made quite a bit of progress and so we pursued it on a fairly rapid time frame over the past six weeks or so.”
K*TEC’s product offerings include printed circuit board assembly, electronic interconnect assemblies, cash assembly, plastic injection molding and after market repair services. The company had revenue of $251 million for fiscal year ending in March 2000.
The company is one of the leaders in the high-mix segment of the OEM industry, which is a less penetrated sector than the high-volume, low-mix segment such as cell phones that the larger competitors play in, said Walker.
“The company is distinguished by its excellent customer service, execution and flexibility and we see a tremendous opportunity to grow the business as the OEMs move to outsource their manufacturing.” Walker also said the business has been growing very rapidly and has consistently delivered very high levels of services to their customer base and the firms see very high demand continuing for the company’s services.
“Our intent is to back the management team and the company in pursuing their growth plans as a standalone entity and we’re excited to be working with Thayer again in this business,” said Walker.
The two firms teamed up in August to acquire over five million shares of common stock of EFTC Corp., a provider of high-mix electronic services, for $22.5 million (Buyouts, Sept. 25, p.28). The acquisition of K*TEC is the latest investment by Thayer Capital in the electronics and outsourced manufacturing business sector. Thayer’s EMS portfolio includes TTM Technologies, Inc., which is a joint holding with Brockway Moran & Partners and Cosmotronic Corp.