Commercial Vehicle Group (CVG) has announced the acquisition of substantially all of the assets and assumption of certain liabilities of First Source Electronics LLC (FSE), a leading electronics systems integrator based in Elkridge, Maryland, that serves a diverse range of market segments including industrials, transportation and military.
FSE’s trailing 12-month sales as of June 30, 2019, was approximately $46 million. The transaction is expected to be accretive to operating income and earnings per share in year one.
“The proliferation of digitalization, connectivity and other power and data applications present meaningful growth opportunities for CVG,” said Patrick Miller, president and CEO. “FSE strengthens our competitive positioning to take advantage of these dynamic trends, complementing our high-complexity, low-to-medium volume electrical business. This strategic acquisition will be a strong contributor to our long-term growth, providing us with the opportunity to leverage our global footprint and maximize cross-selling opportunities, while also creating an entry into the warehouse automation market. We are excited to welcome FSE to the CVG organization.”
FSE is a provider of electrical systems integration and manufacturing services, with specific areas of expertise in electro-mechanical assemblies, cable and wire harness assemblies, chassis integration and cabinet, panel and rack assemblies. Its customers are in highly demanding markets where reliability and peak performance are critical.
“FSE is a great fit with CVG, as we share common core values and are aligned on the long-term strategy for the Electrical Systems segment,” said Kevin Popielarczyk, general manager of FSE. “FSE’s customers are in highly demanding markets where reliability and peak performance are critical. Together with CVG, we will be better positioned to drive growth and continue to deliver value to our customers. We look forward to working together closely to drive further success.”
Total cash consideration for the transaction of as much as $44.75 million, with $34 million due at closing and the balance due in 12, 18 and 36 months, subject to meeting certain targets. The transaction was funded with domestic cash on hand and $2 million availability under our revolving credit facility.
In addition, CVG today announced that it has amended its Third Amended and Restated Loan and Security Agreement, upsizing the revolving credit facility to $90 million from $65 million.
Tim Trenary, CFO, stated, “We are pleased to have successfully upsized the revolving credit facility. This was made possible, in part, by higher sales and the company’s continued focus on efficient operations, including cost control. The upsized revolving credit facility provides as much as $25 million additional liquidity to the company.”