Celestica to Acquire Impakt Holdings

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Celestica Inc. has entered into a definitive agreement to acquire Impakt Holdings LLC, a highly-specialized, vertically integrated manufacturer providing manufacturing solutions for leading OEMs in the semiconductor and organic light emitting diode (OLED) display industries, as well as other markets requiring complex fabrication services. Founded in 1977, the company is headquartered in Santa Clara, with operations in California and South Korea.

Through this acquisition, Celestica expects to gain significant, new capabilities in large-format, complex, high-mix manufacturing solutions for multiple industries, and broaden its precision component manufacturing, full system assembly, integration and machining capabilities. In addition, Celestica anticipates that it will benefit from Impakt’s full spectrum of specialized vertical services including its South Korea-based machining and manufacturing expertise. In conjunction with Celestica's current capital equipment business, Impakt's vertical integration will enable Celestica to provide more efficient end-to-end product life cycle solutions across a diverse set of markets.

"The acquisition of Impakt will enhance Celestica’s position as the largest end-to-end capital equipment manufacturer in our industry," said Rob Mionis, President and CEO, Celestica. "Through Impakt’s extensive capabilities, we will be able to provide customers with even deeper and broader capital equipment manufacturing services including in-region and vertical offerings. Impakt will also expand Celestica’s second largest end market within our growing $2.2 billion ATS segment, and is well aligned to our company strategy of expanding and diversifying our overall revenue and margin mix through targeted investments and acquisitions."

"Impakt's deep expertise in its core markets will fit well with Celestica and its leading position in capital equipment manufacturing," said Dan Rubin, CEO of Impakt. "Together, Impakt and Celestica have the opportunity to create compelling end-to-end solutions for our customers across multiple markets and in key geographies."

Celestica will purchase Impakt for $329 million, and the transaction is expected to be accretive to consolidated non-IFRS operating margin and overall ATS margin upon closing. We intend to finance the purchase price, which is subject to specific adjustments set forth in the definitive agreement, with a combination of borrowings under the company’s current credit facility. The acquisition is expected to close in the fourth quarter 2018, subject to receipt of applicable regulatory approvals and satisfaction of other customary closing conditions.

Company increases consolidated non-IFRS operating margin goal

In July 2018, the company disclosed its goal of non-IFRS operating margin in a target range of 3.5% to 4% over the next 1-3 year period. The company has increased and accelerated this target range to 3.75% to 4.5% over the next 12-18 months. The anticipated increase and acceleration is a result of additional benefits anticipated from several previously announced strategic initiatives associated with: (i) the review of its Connectivity and Cloud Solutions (CCS) portfolio, intended to improve financial performance in this segment, (ii) its $50-$75 million restructuring program which is expected to be completed by the second quarter of 2019, and (iii) continued expansion of its Advanced Technology Solutions (ATS)  segment revenue portfolio, which has been growing organically, as well as through strategy-aligned acquisitions such as Atrenne Integrated Solutions, Inc. and its anticipated acquisition of Impakt.

The company intends to report its third quarter results on October 24, 2018 and provide any additional information associated with financial results and targets at that time.

Celestica to receive additional cash proceeds and accelerated payment of all cash proceeds from sale of real property in Toronto

Celestica now anticipates receiving additional cash proceeds, as well as the accelerated payment of all cash proceeds, associated with the sale of the Toronto real property. Based on new terms associated with the Toronto real property sale agreement, the company now anticipates the full payment of all remaining proceeds of $122 million Canadian dollars (approximately $100 million at current exchange rates) upon closing of the transaction. The closing of the transaction is currently anticipated to occur late in the fourth quarter of 2018, or in the first quarter of 2019.

About Celestica

Celestica enables the world's best brands. Through our recognized customer-centric approach, we partner with leading companies in aerospace and defense, communications, enterprise, healthtech, industrial, semiconductor capital equipment, and smart energy to deliver solutions for their most complex challenges. A leader in design, manufacturing, hardware platform and supply chain solutions, Celestica brings global expertise and insight at every stage of product development - from the drawing board to full-scale production and after-market services. With talented teams across North America, Europe and Asia, we imagine, develop and deliver a better future with our customers.

About Impakt

Impakt Holdings LLC, a Graycliff Partners portfolio company, is a privately held global vertically integrated contract manufacturer. Impakt provides design, engineering and agile manufacturing solutions for the display, semiconductor, solar and other capital equipment industries as well as specialized services that require large format, high-mix complex manufacturing, and integration solutions.