Celestica To List On Toronto Exchange, NYSE After IPO
Dow Jones Newswires -- April 30, 1998
TORONTO (Dow Jones)--Celestica Inc., wholly owned by Onex Corp.
(T.OCX), expects to start marketing its planned initial public offering sometime next month, with the issue scheduled to close before the end of June, Eugene Polistuk, Celestica's president and chief executive said.
In a telephone interview, Polistuk said underwriters for the planned IPO hadn't established a marketing price range for the IPO shares. After completing the issue, Celestica's shares will be listed on the New York Stock Exchange and the Toronto and Montreal exchanges, the executive said.
As reported, Celestica aims to issue up to a maximum of US$400 million of subordinate voting shares in the IPO, with the bulk of the proceeds targeted at repaying debt.
Celestica, which posted revenue of $2 billion in 1997, is the world's third largest manufacturer of electronic components behind SCI Systems Inc. (SCI) and Solectron Corp. (SLR), both of the U.S.
Onex, a Toronto-based holding company, will retain voting control of
Celestica through its holding of multiple-voting shares, Celestica said.
Onex and Celestica management bought Celestica in 1996 from
International Business Machines Corp. (IBM) for about C$750 million.
Toronto-based Celestica Inc. and its two major competitors, SCI Systems Inc. (SCI) and Solectron Corp. (SLR), control about 15% of the electronic components market. That means the three have considerable opportunity to grow through acquisitions of small competitors.
The two factors driving the components market are increasing demand for electronics components and the trend among original equipment
manufacturers (OEMs) to follow the automobile industry and outsource
more component-manufacturing operations, Eugene Polistuk, Celestica's
president and chief executive, told Dow Jones.
The global electronics component market is growing between 25% and
30% annually and is expected to be worth about US$200 billion in 2002, up from about US$73 billion in 1997, Polistuk said.
OEMs are outsourcing an increasing amount of their manufacturing
operations to Celestica and its competitors, because the sole focus of these companies on manufacturing allows them to make components faster and for less cost than the OEMs. Celestica employs 800 engineers whose sole focus is manufacturing, Polistuk noted.
In addition, companies like Celestica are more protected than OEMs
against a downturn in the market of one type of product because they make a slew of different products.
"It's sort of like a mutual fund," Polistuk reasoned. "We're not dependent on one product or one customer; you have multiple customers, multiple products, multiple sectors."
-By Ben Dummett; 416-943-7807
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