Senior Managers Buy CUI’s Electronic Components Business and Form CUI Devices
Today, former senior managers of CUI Inc announced that they have purchased the company’s industry-leading components business from CUI Inc’s publicly-traded parent company, CUI Global. The newly-formed private entity will go to market as CUI Devices and will continue to serve its customers and develop new technologies within its interconnect, audio, thermal management, motion and sensors product lines.
Total consideration for the transaction was $15 million, comprised of approximately $4.7 million cash paid at closing, the retirement of approximately $5.3 million promissory note, and a guaranteed five-year earnout receivable note of $5.0 million issued by the buyer to CUI Global.
The electromechanical business accounted for approximately 36% of P&EM segment revenues of $76.4 million in 2018. Upon the closing of the transaction CUI Global will retain within the P&EM segment its Power business, including an approximate 20% equity interest in Virtual Power Systems.
“The CUI Devices management team strongly believes in this business and is confident in its future prospects as a stand-alone entity,” said Matt McKenzie, CEO of CUI Devices. “We have dedicated many years to building CUI Inc, and we look forward to guiding the company to even greater success as a free-standing company.”
The independent CUI Devices will continue to support its customers globally across most major market segments. The company will focus on supporting and expanding its current electronics components line, with the exception of power supplies, which will remain with CUI Global. CUI Devices will focus its business on interconnect, audio, motion, thermal management and sensor segments with plans to expand into new technology categories in the future.
The new organization is committed to ensuring that customers are minimally impacted by this transaction. All manufacturing sites, business processes, bills of materials, model numbers and back-end software systems will remain intact. CUI Devices’ strong global distribution network will not change, nor will the company’s supply chain.
“CUI Inc is a long-standing, well-established brand, and we are committed to providing our customers continuity,” said McKenzie. “CUI Devices will continue to build and value relationships with customers and partners by focusing on making the design engineer’s job easier and more successful through best-in-class online experiences, technical support and customer service.”
The transaction is a step in CUI Global's previously-announced transformation plan to reshape the Company into a diversified energy infrastructure services provider to North American energy market segments through an aggressive acquisition strategy that leverages the traction that CUI Global's Orbital energy segment has gained with North American oil and gas customers.
"The sale of our electromechanical business puts us on a path to divesting other, non-core business within the P&EM segment, strengthens our balance sheet, and will contribute to the buildout of a diversified energy services platform," stated William Clough, president and CEO of CUI Global. "We remain committed to utilizing CUI Global as the public company platform through which to aggregate energy and telecommunications infrastructure operators to create a new market entrant in the North American energy services industry."