CTS Corporation (NYSE:CTS) today announced that it has entered into a definitive agreement with Benchmark Electronics, Inc. under which Benchmark has acquired CTS’ Electronics Manufacturing Solutions (EMS) business for $75 million in cash. Included are five manufacturing facilities located in Moorpark, CA, Londonderry, NH, Bangkok, Thailand, Matamoros, Mexico, and San Jose, CA and approximately 1,000 employees. The transaction sharpens CTS’ focus on its Components and Sensors business, and provides additional capital to drive growth and enhance shareholder value.
“Since I joined CTS in January, I have been working closely with the Board of Directors to evaluate the Company's portfolio in order to ensure alignment with our core vision and business strategies,” said Kieran O’Sullivan, CEO. “By sharpening our focus on our strengths in Components and Sensors businesses through this transaction, CTS will be better positioned to meet the evolving needs of our customers, increase margins by introducing new value-added products, and grow in attractive adjacencies. We are excited about this opportunity to simplify CTS, focus on our core strengths, and drive profitable growth.”
“The transaction increases our financial flexibility to fund organic growth in our higher margin businesses, and consider value-enhancing external opportunities,” Mr. O’Sullivan added. “It also permits us to evaluate additional options to return cash to shareholders, which we expect to evaluate in the near term.”
Mr. O’Sullivan continued, “This transaction also is the right long-term strategic move for our EMS customers and employees. We have the highest regard for the dedicated EMS employees and are confident they are a welcome addition to the Benchmark team. As part of Benchmark, a company dedicated to providing electronics manufacturing services, the EMS business will have better scale and footprint to meet the needs of customers around the world. We are working closely with Benchmark on a smooth transition.”
“As part of our previously announced company-wide strategic evaluation, we will continue to right size our global manufacturing footprint and evaluate ways to streamline the business and reduce costs,” Mr. O’Sullivan concluded. “While we are focused on improving the Company’s cost structure, the value we expect to create will primarily be driven by growth and innovation. We remain committed to investing in engineering research and development. CTS is a strong company with outstanding capabilities, employees and customer relationships, and we are excited to move forward with a renewed focus on delivering innovative solutions to our customers.”