Hong Kong-based Meadville Holdings has sold its printed circuit board (PCB) business to California-based TTM Technologies for $521 million in cash and stock. Meadville also sold its laminates business to its largest shareholder, Tang Hsiang Chien, for $359 million.
TTM will pay $114 million in cash and will issue 36.3 million new TTM shares. Based on the closing price of TTM on Nasdaq on Friday of $11.21, the shares have a total value of $407 million. TTM has traded in a narrow range over the last 30 days and the average closing price over the period is around $11.22. Over a longer period of 180 trading days, the average price is lower at $8.88.
The total consideration for the PCB business is $521 million. Based on Ebitda of HK$938.2 million ($121 million) earned by the PCB business for calendar 2008, TTM is acquiring the business at an Ebitda multiple of 4.3x.
Meadville's largest shareholder Tang Hsiang Chien and his affiliates currently own 72.2% of Meadville. Tang will own one-third of the share capital of TTM after the deal and will manage TTM's Asia business. Tang, the founder of Meadville, is the father of current Hong Kong chief secretary, Henry Tang.
TTM is North America's largest PCB manufacturer by revenue. It has eight manufacturing bases, seven in the US and one in China. Meadville currently gets 56% of its PCB revenues from China, 6% from North America and the balance from the rest of the world. The deal will strengthen TTM's position in low-cost Asian regions and complement its US footprint, Meadville said in a Hong Kong stock exchange filing.
The deal creates one of the world's largest producers of printed circuit boards, TTM said in a written statement yesterday. TTM added that it expects the deal to be accretive without synergies in the first year after completion.
Meadville also said yesterday it will sell its laminates business to an investment company wholly owned by Tang for HK$2.8 billion. The laminates business earned a profit before tax of HK$21 million in calendar 2008, down from HK$105 million the previous year. Meadville's directors said they believe the laminates business, which made a net loss in 2008, will be too small to be run as a listed company.
Both deals are subject to shareholder and regulatory approvals, including approval by the Committee on Foreign Investment in the United States (CFIUS) for the PCB sale.
Once these approvals are obtained, Meadville proposes to issue shareholders a special dividend of HK$3.47 per share and delist its shares from the Hong Kong stock exchange where they currently trade. The dividend will be paid through a combination of HK$1.867 in cash and 0.0185 shares of TTM for every Meadville share. The price of HK$3.47 represents a 61% premium over Meadville's last traded price on Friday. During the last six months Meadville has traded up to a high of HK$2.79 and a low of HK$0.95.
Meadville is advised by Merrill Lynch, while TTM is advised by UBS.