Methode Electronics, Inc. has entered into a definitive agreement with Pacific Insight Electronics Corp., a global lighting, electronics and full-service solutions provider to the transportation industry, pursuant to which Methode will acquire all of the outstanding common shares of Pacific Insight in a cash transaction.
Methode will fund the total consideration of approximately U.S.$114 million with available cash and its existing credit facility. Methode expects the acquisition to be accretive to earnings in its current fiscal year ending April 28, 2018.
Pacific Insight is a global solutions provider offering design, development, manufacturing and delivery of lighting and electronic products and full service solutions to the automotive and commercial vehicle markets. Pacific Insight’s vision is to offer advanced technologies including lighting and electronic solutions that create a better driving experience.
The company’s LED lighting systems and electronic modules are driving automotive innovation, as OEMs seek to differentiate their vehicles with advanced lighting technologies. A focus on design and manufacturing excellence, responsiveness and customer service has made Pacific Insight a preferred partner of choice for OEMs.
Pacific Insight was founded in 1984 and has manufacturing locations in Fresnillo, Mexico, and Nelson, British Columbia, Canada, and has offices in Detroit, Michigan, and Vancouver, British Columbia. The company employs approximately 1,100 people across these locations. Trailing 12-month revenue was approximately U.S.$99 million as of March 31, 2017.
Methode’s President and CEO Don Duda said, “Pacific Insight’s innovation and technology in LED based ambient and direct lighting will expand our presence within the automotive interior, as well as augment our efforts in overhead console and other areas.
“Additionally, because of Pacific Insight’s reputation as an expert in lighting, we see the potential to bring Pacific Insight’s technology and expertise to our non-automotive customers as well. Finally, the addition of Pacific Insight will advance our objective to pursue strategic acquisitions where we can leverage our core competencies and provide an attractive value proposition for our shareholders,” Duda continued.
Pacific Insight’s CEO Stuart Ross commented, “Methode is the ideal partner for us given the complementary nature of our products and expertise. Importantly, Methode’s global manufacturing footprint will provide us the ability to meet our customers’ requested expansion into Asia and Europe.
“As part of Methode, we will be uniquely positioned to accelerate our innovations, and at the same time, strengthen and scale operations in a strategic manner. The size and strength of Methode will provide additional opportunities for all our stakeholders, including employees, customers, suppliers and local communities that we would not have had on our own. For our shareholders, this transaction will create compelling value by providing them liquidity at an attractive valuation and premium to market in an all-cash transaction,” Ross concluded.
The purchase price represents a valuation multiple of 8.6 times Pacific Insight’s adjusted EBITDA, excluding revenue and cost synergies, for the trailing 12 months ended March 31, 2017. Adjusted EBITDA is a non-GAAP measure defined as net earnings before interest, taxes, depreciation and amortization, adjusted for unusual, out-of-period, non-operating expenses, and an adjustment for development costs that would be expensed under U.S. GAAP.
The acquisition will be accomplished as a court-approved plan of arrangement under Canadian law and is subject to customary closing conditions, including shareholder approval. The transaction is expected to be completed in the second quarter of fiscal 2018.