Circuits Assembly Online Magazine - TFS Acquires Customers, Employees of Integrex

Three-Five Systems Inc. (TFS, Tempe, AZ), has hired key employees and acquired the customer base of Integrex Inc. (Bothell, WA), a privately-held electronics manufacturing services (EMS) company. TFS will immediately begin working with customers to transfer existing programs from Bothell to the Redmond facility; the process is expected to take approximately six weeks.

The agreement is the second EMS transaction by TFS in the Northwest in the past 15 months. TFS acquired the EMS company ETMA (Redmond, WA) in December 2002 and maintains operations in the Redmond location.

Integrex was founded in 1999 as a full-service EMS company providing turnkey manufacturing services, including design, new product introduction (NPI), printed circuit board assembly (PCBA), system integration, test and after-market support. Primary investors included Benaroya Capital, Fluke Venture Partners and Sunrise Capital. Representatives for the investor group indicated that several companies competed to obtain the Integrex business and TFS was selected because of its existing presence within the Northwest regional customer community, combined with strong offshore manufacturing capability and a solid balance sheet.

Jack Saltich, chief executive officer of TFS, said, "Integrex has penetrated certain market segments, including military applications, that represent target growth areas for TFS. We believe we can expand upon this business by leveraging our manufacturing quality in Redmond with our high volume efficiencies at our Asian manufacturing locations and thereby continue our initiative to become a dominant EMS provider in the Northwest."

TFS is buying the raw material inventory of Integrex as needed to begin manufacturing products for its new customers and is providing Integrex with an up-front, one-time payment to offset customer transfer costs. TFS is not acquiring Integrex's manufacturing facility in Bothell, and it is not expected that the transaction will generate a goodwill asset for TFS.

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