Garden Grove Firm in $10-Million Stock Swap : Dense-Pac to Acquire Competitor
In a move to expand its European sales, Dense-Pac Microsystems, a Garden Grove computer microchip maker, has agreed to acquire a European competitor in a stock swap valued at roughly $10 million.
Under the merger agreement, Dense-Pac will acquire all the stock of Scotland-based Hybrid Memory Products in exchange for issuing 8 million new Dense-Pac shares to the Scottish firm’s stockholders.
The two companies are expected to have combined sales of more than $25 million for the year ended February, 1990, Dense-Pac Chairman James G. Turner said.
Dense-Pac has been trying to establish a presence in Europe. Earlier this year, the firm announced the acquisition of its European affiliate, EMM Dense-Pac Ltd.
William M. Stowell, Dense-Pac’s chief financial officer, said Hybrid’s experience in Europe will help in improving the profitability of the EMM operation.
Likewise, Dense-Pac will play a role in boosting sales in the United States of commercial products made by Hybrid’s U.S. subsidiary, San Diego-based Mosaic Semiconductor, he said.
Less than 10% of Dense-Pac’s present sales are in Europe. After the acquisition, which is subject to the signing of a definitive agreement, more than 40% of the sales of the combined firm will come from Europe, Stowell said.
Dense-Pac and Hybrid have complementary product lines and are strong in different markets, he said. Dense-Pac produces custom memory chips, mostly for U.S. defense customers. Hybrid does most of its business in Europe and is stronger in the commercial, industrial and aerospace markets.
Since emerging from a Chapter 11 bankruptcy reorganization in 1987, Dense-Pac has been on the financial mend. The company earned $821,000 on revenue of $6 million in fiscal 1988.
It expects to earn about $900,000 on revenue of $7 million for its fiscal 1989 year that ended Feb. 28, Stowell said.
THE COMPANIES AT A GLANCE
Dense-Pac Microsystems Hybrid Memory Products Headquarters: Garden Grove Scotland Employees: 55 not available Revenue: $7 million * $11 million year ended 2/28/89 year ended 3/31/89 Net income: $900,000 $1.5 million Chief executive: James G. Turner David Armstrong
* Dense-Pac financial results are preliminary projections and should be noted as such.
