Calay Systems Inc. Approves Sale to German Interests

Calay Systems Inc. of Irvine, a privately held technology company crippled by an overly ambitious expansion plan, said Tuesday it has agreed to be acquired by a West German holding company for an undisclosed amount of cash.

Effective Thursday, Calay and an affiliated West German firm will become subsidiaries of Aktiengesellschaft Fur Industrie Und Verkehrswesen (AGIV) of Frankfurt, a public holding company with annual revenue of $2.5 billion.

A Calay spokesman said the acquisition of both firms is valued at $15 million to $20 million.

Calay President Peter Shaw, who was recruited a year ago to orchestrate a financial reversal, said the acquisition is the final step in his efforts to revitalize the company.

“I’ve done turnarounds before,” Shaw said. “This was a classic, a company that was literally being driven off the end of a cliff. We were able to gain control of it at the 11th hour.”

Founded in 1982, Calay and its West German affiliate specialize in developing software products that allow electronics manufacturers to use personal computers to design and produce printed circuit boards.

By the beginning of 1986, Calay was generating more than $10 million in annual sales, employed more than 100 people and commanded an estimated 8% of the national market for computer-aided circuit-board design systems. Anticipating even more sales growth, the company continued its aggressive expansion program.

Facing Serious Problems

But Calay was unable to achieve the annual sales needed to support the expansion and found itself facing serious financial problems by mid-1986. After his arrival, Shaw instituted cost-cutting measures, introduced a new, more competitive line of products and began a search for more capital to fund future research and development.

That search eventually led to AGIV, which will combine Calay and its West German affiliate into one international operation.

AGIV is acquiring 100% of the equity of Calay and more than 50% of the related firm.

Shaw said the AGIV acquisition will allow Calay to increase its current work force of about 90 by 10% to 15% within six to nine months. The new employees will be involved in design and marketing efforts.

“We’re in a building mode. We’re recruiting heavily,” Shaw said.

“AGIV is 105 years old. They look at the long term.”