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Acquisition to help SVI expand footprint in EU

Jan 25. 2016
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By SASITHORN ONGDEE
THE NATION

SVI, A LEADING electronics manufacturing services provider, is this week expected to complete the purchase of a 100-per-cent stake in European rival Seidel Electronics Group in what the Thai company has described as a “big step forward” in its growth stra
SVI chief executive officer Pongsak Lothongkam said the acquisition would equip the company with a very strong base in Austria and Eastern Europe from where to serve its customers. The contract-manufacturing industry has been in a period of major change in the region, with competition intensifying over the provision of services at an optimum cost. 
Without production sites in Asia and Eastern Europe, contract manufacturers serving Europe are no longer competitive. European product design and manufacturing know-how complements Asian strengths in the global supply chain and mass production.
“For SVI, Europe has long been our biggest market, but one we’ve served without a European production facility, which our customers have been recently asking us to add to our global footprint,” Pongsak said. 
With the acquisition, Pongsak said SVI would be able to access the European markets as well as advanced engineering and systems integration skills in Austria and low-cost production sites in Slovakia and Hungary.
In addition, the CEO said SVI’s European customers would have an alternative for Eastern Europe production and logistics while Seidel’s customers would have an option for high-volume production at SVI’s Asian facilities in Thailand and Cambodia. 
“This is truly a win, win, win situation for SVI, Seidel and all of our customers,” Pongsak said.
SVI is among the 50 largest EMS providers in the world and already has a very strong position in Europe, with a large portion of its customer base leading original-equipment manufacturers in Scandinavia. 
It employs over 2400 people in Thailand, with offices also in Denmark, China and Japan. It had realised revenues of over US$257 million (Bt9.2 billion) in 2014.
Seidel is a leading provider of EMS in Austria and generated turnover of $100 million in 2014 from its locations in that country, Slovakia, Hungary and Slovenia. The group employs over 700 people. “We expect revenues of the combined company to surpass $400 million in the next 12 months,“ Pongsak said. 
The deal is subject to merger approval from European authorities. 
SVI will use cash flow and bank loans to fund the deal, which does not require shareholder approval as its value is not more than 15 per cent of SVI’s total assets. SVI’s total assets as of September 30 were Bt7.82 billion. 
Pongsak, along with a number of executives from SVI, this week plans to visit all Seidel sites in Europe to meet with its employees and customers.
 

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