Innovex was the major supplier (70%+ market share)of wires to make head interconnects. Then, with MR technology there was need for 4 and 5 wire assemblies, instead of 2 wires. Innovex created a tab to make it easier to manage 4 loose wires, but heads got smaller and new connections were developed.
Innovex developed a next generation flex circuit design which was again like a loose wiring attached to the head and mounted to the suspension, as did 3M and Read Rite. Hutchinson, Fujitsu and Nitto Denko developed laminated circuits printed directly onto suspensions.
It has developed that laminated circuits are the most used choice for high end drives although Seagate has used flex circuits from Innovex. Some people suggest that SEG may switch to laminated circuits, but that has not been announced.
Anyway, this little history sets the picture for the following announcement that Innovex is buying AdFlex. Innovex is in need of something to replace lost business in head interconnects. They have been developing flex circuits for chip scale packaging in hopes of diversifying out of HDD, but this announcement says they are still heavily focused on HDD.
Maybe there is synergy in this merger? Both companies are way off their highs, but then all HDD stocks can say the same. Innovex is also warning of lower than expected earnings.
Regards, Mark
Innovex Inc. (INVX) 13 1/2 -1/2: diversified manufacturer of electrical components to acquire ADFlex Solutions Inc. (AFLX 4 9/32 +9/32), a leading supplier of flexible circuit-based interconnect solutions, for cash; INVX to acquire all the outstanding shares of ADFlex for $3.80 per share; INVX also warns that it expects fiscal Q3 results in the range of $0.17 to $0.19 per share, slightly less than analyst expectations; see press release; meanwhile, ADFlex Solutions expects to report a small operating profit with net sale up nearly 20% over net sales in Q1; see press release.....
Innovex Announces Intent to Acquire ADFlex Solutions, Inc.
PR Newswire - July 01, 1999 17:53
HOPKINS, Minn., July 1 /PRNewswire/ -- Innovex, Inc. (Nasdaq: INVX) and ADFlex Solutions, Inc. (Nasdaq: AFLX) announced today that the two companies have entered into a definitive merger agreement. Under the terms of the agreement, Innovex will commence a cash tender offer on July 7, 1999 to purchase all of the outstanding shares of ADFlex for $3.80 per share. By its terms, the tender offer, unless extended, will expire on August 3, 1999.
Upon completion of the tender offer and following the post tender offer merger, ADFlex will become a wholly owned subsidiary of Innovex, which will continue to trade on the Nasdaq National Market under the symbol INVX. The transaction will be recorded using purchase accounting rules.
The combined company will be the largest flexible circuit manufacturer in North America. On a pro forma basis, based on twelve month trailing revenues, the new company would have had annual revenue of approximately $230 million. By business segment, the combined company would generate approximately 54% of annual sales from hard disk drive, 17% from storage, 11% from telecommunications, 5% from computer, and 13% from consumer, medical, and other electronic markets. Although Innovex and ADFlex do not compete with each other, they operate with similar and complementary technologies. The companies anticipate significant cross-selling opportunities and manufacturing and product development synergies.
Thomas W. Haley, Chairman and Chief Executive Officer of Innovex, Inc., said, "We believe that joining forces with ADFlex is in the best interests of our customers, our shareholders and our employees. The combining of these two companies will result in a larger, stronger organization that is better positioned to achieve its goals and succeed in a dynamic market place."
William P. Murnane, President and Chief Operating Officer of Innovex, Inc., commented, "This transaction accomplishes a number of strategic objectives for "Innovex. First, it broadens our customer base and product line while reducing our dependence on the volatile hard disk drive industry; second, it allows Innovex to employ its substantial financial resources in a manner that will provide a superior return to its shareholders; and third, it positions Innovex to leverage its process technology and low cost manufacturing operations to become the world's leading flexible circuit manufacturer."
Steven Sanghi, Chairman of the ADFlex Board of Directors, said, "We are excited about the combination with Innovex. Though we are pleased with this quarter's operating results and profitability, our debt obligations made it necessary for ADFlex to seek a strategic partner. Innovex's strong balance sheet addresses ADFlex's immediate need for capital and provides the liquidity necessary to fund the operations of the Company in the second half of the year. Additionally, Innovex's technological base complements our existing products and customer base and creates opportunities to leverage business development with our customers." ADFlex also prereleased its results for the quarter ended June 26, 1999 in a separate press release today.
The transaction is subject to regulatory review and approval and the tender of a majority of the issued and outstanding ADFlex shares.
Innovex also stated today that the Company expects its fiscal 1999 third quarter results from operations will be in the range of $0.17 to $0.19 per share, slightly less than analyst expectations set at the commencement of the quarter. The change is due to weaker than anticipated demand in the disk drive industry. While the overall disk drive related business was softer than anticipated, third quarter sales generated from flexible circuits are expected to increase 25% over the fiscal 1999 second quarter with similar growth anticipated in the fourth quarter.
In addition, Innovex has entered into negotiations to divest its software division, Iconovex. The Company expects that it will record charges of approximately $1.7 million or $0.08 per share in the third quarter related to this divestiture. Since its inception, Iconovex and its Smart Solution joint venture have experienced operating losses and were projected to continue to do so in the foreseeable future. As a result, the divestiture will have a positive impact on future operating results.
Innovex, Inc. is a diversified manufacturer of electrical components for the computer, medical and telecommunication markets. Innovex is known worldwide for its excellence in advanced engineering and low cost manufacturing.
ADFlex Solutions, Inc. is a leading supplier of flexible circuit-based interconnect solutions to the computer, computer peripheral, communication and other industries. Applications for flex-based interconnects include cellular telephones, hard disk drives, and other storage systems, high-end consumer products, notebook computers, pagers and personal communications systems.
Except for historical information contained herein, the matters discussed in this release are forward looking statements that involve risks and uncertainties, including the timely availability and acceptance of new products, the impact of competitive products and pricing, and other risks detailed from time to time in both Company's SEC reports, including Innovex, Inc.'s report on Form 10K for the year ended September 30, 1998, and Form 10Q for the quarter ended March 31, 1999, and ADFlex Solution Inc.'s Form 10-K for the year ended December 27, 1998, Form 10Q for the quarter ended March 28, 1999, and other Securities and Exchange Commission filings.
TELECONFERENCE CALL ALERT
INNOVEX
Friday, July 2, 1999 at 10:00 a.m. Central Time
To participate in the Innovex teleconference call, please dial
212-676-5247.
If you are not able to participate in the conference call, you may listen
to a Post View recording as follows:
Friday, July 2nd, beginning at noon Central Time through Saturday, July 3rd, at noon Central Time
The number for Post View is: 800-633-8284 or 619-812-6440, code number
12696486#
ADFLEX
Friday, July 2, 1999 at 11:00 a.m. Central Time
To participate in the ADFlex teleconference call, please dial
212-896-6107.
SOURCE Innovex, Inc.
/CONTACT: William P. Murnane, President and COO or Douglas W. Keller, VP
- Finance of Innovex, Inc., 612-938-4155, Fax 612-938-7718, or Neil Dial,
President and COO or Don Frederick, Vice President and CFO of ADFlex
Solutions, Inc., 602-786-8400, or Fax 602-786-8280/
/Web site: adflex.com
/Web site: innovexinc.com
ADFlex to Turn Profit On Increasing Net Sales
Business Wire - July 01, 1999 18:08
CHANDLER, Ariz.--(BUSINESS WIRE)--July 1, 1999--ADFlex Solutions Inc. (Nasdaq NM: AFLX) Thursday announced that, for its second fiscal quarter, it expects to report a small operating profit on net sales which will be up nearly 20 percent over net sales in its first quarter.
The operating profit excludes restructuring charges announced in April 1999. Net sales are expected to be within the range of consensus analysts' estimates and earnings per share are expected to exceed the estimates. The company expects to report its results for second quarter on July 21, 1999.
Separately today, Innovex Inc. (Nasdaq: INVX) announced that Innovex and ADFlex have entered into a definitive merger agreement. Under the terms of the agreement, Innovex will commence a cash tender offer to purchase all of the outstanding shares of ADFlex. The tender offer, unless extended, will expire on Aug. 3, 1999.
ADFlex Solutions Inc. is a leading supplier of flexible circuit-based interconnect solutions to the computer, computer peripheral, communications and consumer electronic product industries. Applications for flex-based interconnects include cellular telephones, hard disk drives and other storage systems, high-end consumer products, notebook computers, pagers and personal communications systems.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this release which are not historical facts may contain forward-looking statements that involve risks and uncertainties, including, but not limited to, risks detailed in the Company's Annual Report on Form 10-K for the year ended Dec. 27, 1998, Form 10-Q for the quarter-ended March 28, 1999 and other Securities and Exchange Commission filings.
CONTACTS: ADFlex Solutions Inc.
Neil Dial, 602/963-4584
Donald E. Frederick, 602/963-4584
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