Viasystems Gains Defense Work By Merging With Merix
The privately held company Viasystems announced that they had made a deal to merge with Merix this month. Both of the companies make printed circuit boards for a variety of applications. Viasystems is currently privately held but after the merger the new company will be public.
The two companies while manufacturing the same basic product have focused on different markets and capabilities. Viasystems utilizes its large line-up of company names to generate large amounts of circuit boards from production facilities mainly in Asia for OEM manufacturers. Merix has focused on rapid prototyping and production for its customers.
One of the markets that has seen a great deal of growth recently for Merix has been defense and aerospace. Merix has focused on producing military specification standard electronics. It has signed large deals with Rockwell Collins to support their products.
This is a classic example of gaining entry into the U.S. and other defense markets by merging or acquiring another company. Many large defense contractors have used this technique to either acquire a new product or capability or perhaps enter a new geographic market. In this case Viasystems is getting Merix's contracts and contacts with other defense contractors. Over the last quarter Merix saw its aerospace business grow four percent with strong trends continuing in that direction.
Viasystems has seen its struggles over the last decade. It went bankrupt in 2002 and ended up selling off its wire harness business to concentrate on circuit boards. This business while recovering has relied on its focus with using China based manufacturing as the company closed three U.S. based plants in 2008 and early 2009. By merging with Merix it will also make it easier to do business with the U.S. Defense Department and industry by having U.S. facilities and employees. This provides a way to meet the technology transfer and security requirements.
Through these kind of mergers companies are able to get access to customers and markets especially defense related ones. If Viasystems was trying to start from scratch in trying to become a supplier or work with the Department of Defense it would have taken time and some investment to make inroads. Now with the merger with Merix they have a customer base and contacts.