The arranged marriage of Anaheim’s Multi-Fineline Electronix Inc. and Singapore’s MFS Technology Inc. isn’t dead after all.
Singapore’s WBL Corp., which owns a majority of both companies, said earlier this month it still backs a combination of the two.
Multi-Fineline, known as M-Flex, has fought the deal and even sued WBL. Some in Singapore speculated earlier this year that WBL would drop its combination bid.
Now M-Flex has begrudgingly filed an updated plan for the combination with the Securities and Exchange Commission. It calls for creating a holding company that would acquire MFS Technology.
Connie Chandler, M-Flex’s director of investor relations, declined to elaborate on the filing.
“We’ll let the document be our statement,” she said.
The document says a lot. After outlining terms of the deal, M-Flex goes on to urge minority shareholders to vote against the deal, as it has all along.
All of M-Flex’s directors, except two representing WBL, are against the deal, according to the filing.
WBL originally proposed the deal a year ago. M-Flex initially complied, offering $500 million for MFS. It rescinded its offer when MFS reported slower-than-expected sales and a steep loss last year, and M-Flex hit its own rough patch.
Earlier this month, WBL, also known as Wearnes, reiterated its support for the deal.
“We believe that the business rationale to combine M-Flex and MFS still remains, but at the same time, it is imperative from Wearnes’ perspective that the merged entity is financially strong,” WBL said. “We still believe that the merger will produce strategic, financial and operational synergies that will be value enhancing for our stockholders.”
M-Flex’s minority investors, who own about 40% of the company, aren’t so sure. They’ve driven down M-Flex’s 65% in the past 12 months, in part because of the deal and M-Flex’s own slowdown.
The company counted a market value of $425 million last week.
According to the SEC filing, M-Flex plans to create New M-Flex Holding Corp. to make an offer for MFS. New M-Flex would be a subsidiary of “old” M-Flex.
If the offer is made and accepted by shareholders, New M-Flex would become Multi-Fineline Electronix Inc. and “old” M-Flex would become a subsidiary, along with MFS. Officers would not change.
What isn’t clear from the filing is where that would leave WBL,it stands to own a majority of the combined company,or what would happen if M-Flex decides not to make the offer.
Meanwhile, M-Flex is weathering a tough market. The company makes flexible circuit boards used in wireless phones. Motorola Inc. makes up three-fourths of M-Flex’s $500 million in yearly sales.
Falling prices for circuit boards drove a 79% drop in profits for the December quarter.
Motorola has been in a freefall of its own.
Last week, the company warned of a first-quarter loss because of declining sales and falling prices for its wireless phones.
SINGAPORE SCORECARD
– Multi-Fineline Electronix: Anaheim circuit board maker known as M-Flex. Products used in wireless phones. Yearly sales of $500 million, three-fourths from Motorola.
– MFS Technology: Singapore circuit board maker with yearly sales of $360 million, half from Motorola.
– WBL: Singapore holding company with investments in technology, automotive, real estate. Yearly sales of $1 billion. Owns 61% of M-Flex, 56% of MFS.
