The merger deal involves the transfer of all issued Speedy-Tech shares to IMI. In exchange, IMI shall provide Speedy-Tech shareholders a cash consideration of $0.535 a share or a share exchange equal to 1.3249 shares of IMI for each Speedy-Tech share, or a combination of both.
Upon completion of the merger, Speedy-Tech will become a unit of IMI and will be delisted from the Singapore Stock Exchange.
The transaction, however, is still subject to the approval of the respective companies’ shareholders and regulatory authorities in the Philippines and Singapore.
Several shareholders, representing 64.9 percent of Speedy-Tech’s capital stock, have already signified their intent to receive the share exchange offer and/or cash.
Assuming the remaining shareholders opt to receive the share exchange offer, Ayala’s stake in IMI will be reduced from 78.7 percent to 64.5 percent. But in the event the remaining shareholders elect to receive cash, Ayala’s stake in IMI will only be reduced to 74.6 percent.
The total cash consideration for the merger will be financed by IMI via a combination of its internal cash and bank debt.
Commenting on the proposed transaction, Ayala Corp. president and IMI chairman Jaime Augusto Zobel de Ayala said: "We are pleased with this development as this is consistent with our objective to position IMI as one of the leading EMS providers in Asia by establishing a global manufacturing footprint. The merger presents synergistic propositions that will be value enhancing to all shareholders."
The merger will expand IMI’s geographic presence as it gains access to the China market. It will also aid in diversifying its customer base as there is little customer duplication between the two entities.
IMI’s customers are largely Japanese while Speedy-Tech’s are from the US, Europe and China. IMI will also be able to expand into other industry segments, particularly in the medical, automotive and industrial equipment sectors.
The merger is also expected to generate cost benefits through the integration of operational functions and increased economies of scale.
Speedy-Tech manufactures printed circuit board assembly (PCBA) and box-build services, and is an original design manufacturer (ODM) of power electronics solutions used in telecommunications and various consumer electronic devices.
As of June 8 this year, Speedy-Tech had a market capitalization of S$188.1 million. It registered total revenues of S$248 million in 2004.
Speedy-Tech has five production facilities – one in Singapore, one in the Philippines and three in China - with more than 100 customers spread across the US, Europe and the Asia Pacific region.
IMI is embarking on a major expansion program this year as it aims to be a leading global complete manufacturing solutions provider. The expansion is also in preparation for its planned initial public offering in tech-savvy exchanges like the Nasdaq or the Singapore Stock Exchange.
For this year, IMI has set aside $10 million for its capital expenditures, significantly higher than the previous year’s budget as it expands its sales network. It intends to set up sales offices in Japan and North America to drive strategic relations with customers and suppliers in the region.
IMI is looking to expand in China by putting up a manufacturing plant to be able to capture part of the growing demand for semiconductor devices in that market. China is an attractive investment site for the electronic and semiconductor firms because it has a big consumer market, better infrastructure, lower labor and power cost.
The expansion in China is part of IMI’s medium-term strategic objective to become a tier-two EMS company, or one having annual revenues in the vicinity of $500 million to about $1 billion.
As of end-2004, IMI posted a net income of P1.2 billion with cash of P1.5 billion and no debt. IMI offers one-stop electronics manufacturing services with capabilities in product development, prototyping, box-build, component assembly, sub-assembly, PCBA,
plastic injection, metal stamping and supply chain management.
It has manufacturing operations in Laguna and Cebu as well as design centers in Manila, Tustin, North America and a support center in Singapore.