ANAHEIM, CA -- DDi Corp. will acquire Coretec for approximately C$25.2 million ($23.5 million) in cash and debt assumption, the companies announced today.

The price is about twice what DDi offered for its PWB competitor on Oct. 26 and values Coretec at about one-third its annual revenue: Coretec's sales for the 12 months ended Sept. 30 were approximately CDN $77.2 million. The companies will implement a restructuring plan, including integrating both companies' Toronto facilities, immediately after the transaction closes that is currently estimated to generate $8 million in annual savings.

The deal includes C$7.4 million in cash for Coretec’s common stock and the assumption of C$17.8 million of Coretec debt outstanding as of Sept. 30. The Coretec debt includes approximately C$12.7 million related to long term facilities secured by property and equipment, and C$5.1 million pursuant to the working capital revolver credit facility.

The deal is subject to court approvals and shareholder approval. Shareholders holding approximately 70.3% of Coretec’s outstanding common shares on a fully diluted basis have already approved the deal. Both companies' boards have approved the deal.

Under the deal, Coretec shareholders will receive C$0.38 per Coretec common share, about a 100% premium of the 20-day volume weighted average price. As of Sept. 30, DDi had $25.6 million in cash on hand. The two companies had combined revenues of about $236 million for the fiscal year ended Sept. 30.

DDi president and chief executive Mikel H. William said, "Our plans include a full integration of our respective Toronto operations to create a world class facility with solid customer demand. The combined company will be well positioned to effect an orderly Toronto integration to ensure minimal, if any, customer disruption. Further we will integrate our sales, general and administrative functions. The addition of Coretec’s two US facilities will extend our presence in the strategic military/aerospace marketplace and deepen our flex and rigid-flex product capabilities."

The companies did not indicate what role, if any, Coretec president and chief executive Paul Langston would have in the new company. 

Industry veterans will remember the on-again/off-again nature of previous acquisitions, including the tug-of-war between Hadco and Viasystems over Zycon in the 1990s. The DDi-Coretec agreement prohibits Coretec from soliciting or initiating any discussion concerning any other similar transaction, gives DDi the right to match any unsolicited superior proposal, and includes a "poison pill" termination fee of $1 million in the event the deal collapses.

• Prev
• Next