Sparton Acquires Delphi Medical Systems Contract Manufacturing Business
July 12 2010 - 8:15AM
Business Wire
Sparton Corporation (NYSE: SPA), a supplier of complex and
reliable electronic and electro-mechanical products, sub-assemblies
and related services to the highly regulated Medical, Defense &
Security, and Aerospace markets announced today that its wholly
owned subsidiary, Sparton Medical Systems Colorado, LLC, has signed
a definitive agreement to acquire certain assets related to the
contract manufacturing business of Delphi Medical Systems, LLC in
an all-cash transaction valued at $8.0 million, subject to certain
post-closing adjustments.
Delphi Medical Systems, located near Denver, Colorado, primarily
manufacturers OEM medical devices for the Therapeutic Device
market, including blood separation equipment, spinal surgery
products and 3-D eye mapping devices. Additionally, the company
provides engineering and manufacturing support to a market leading
environmental sensor company whose markets include meteorology,
weather critical operations and controlled environment
applications.
Strategic highlights of the acquisition include:
- Projected annual revenue of
approximately $32 million with a new and diversified customer
base
- Provides immediate entry into
the high growth Therapeutic Devices market
- Expansion of Sparton Medical
Systems into a western geographic footprint will enable it to serve
existing and future West Coast customers more proficiently
- Enhances Sparton’s business
development activities with the addition of personnel and
associated manufacturing representative relationships
- Synergistic operational
opportunities have been identified within all of Sparton’s existing
business units
- Not expected to result in the
recognition of goodwill
“The addition of this business meets the criteria of our growth
strategy by providing expansion into the therapeutic device market
and diversifying our customer base, while also expanding our
geographic reach into the western United States,” commented Cary
Wood, President & CEO, Sparton Corporation.
“The acquisition makes enormous sense both economically and
operationally. It is well-suited to our existing Medical business
and, with a timely integration, we anticipate it will enhance
Sparton’s overall profitability. Furthermore, we expect this
addition will provide operational opportunities for our Defense and
Security Systems (DSS) division, particularly with the
environmental sensor business which requires technology similar to
what we use in the production of sonobuoys. The transaction will
also strengthen our business development efforts, adding West Coast
coverage and bringing with it existing manufacturing representative
agreements.
“In the last 18 months, Sparton has endured extensive
restructuring activities by focusing its efforts primarily on
operational and financial improvements that have resulted in a
return to profitability. This acquisition marks a major milestone
in the turnaround as we shift our focus to future growth. As we
initiate Sparton’s strategic growth plan, this acquisition
immediately allows access to new markets, geographies and a
diversified product offering. We look forward to the efficient
integration of operations and expect this acquisition to improve
profitability and enhance shareholder value,” Mr. Wood
concluded.
The transaction is expected to close within 30 days and will be
funded through Sparton’s existing cash reserves. It is not
anticipated that the acquisition will result in any changes with
Sparton’s existing Amended and Restated Revolving Credit and
Security Agreement with PNC Bank, National Association.
About Sparton Corporation
Sparton Corporation (NYSE:SPA), now in its 110th year, is a
provider of complex and sophisticated electromechanical devices
with capabilities that include concept development, industrial
design, design and manufacturing engineering, production,
distribution, and field service. The primary markets served are in
the Medical Device, Defense & Security Systems, and Electronic
Manufacturing Services industries. Headquartered in Schaumburg, IL,
Sparton currently has four manufacturing locations worldwide.
Sparton's Web site may be accessed at http://www.sparton.com.
Safe Harbor and Fair Disclosure Statement
Safe Harbor statement under the Private Securities Litigation
Reform Act of 1995: To the extent any statements made in this
release contain information that is not historical, these
statements are essentially forward-looking and are subject to risks
and uncertainties, including the difficulty of predicting future
results, the regulatory environment, fluctuations in operating
results and other risks detailed from time to time in Sparton's
filings with the Securities and Exchange Commission (SEC). The
matters discussed in this press release may also involve risks and
uncertainties concerning Sparton's services described in Sparton's
filings with the SEC. In particular, see the risk factors described
in Sparton's most recent Form 10K and Form 10Q. Sparton assumes no
obligation to update the forward-looking information contained in
this press release.
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