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Jabil buys into Chinese market

The $250-million purchase of a Hong Kong electronics manufacturing company also doubles Jabil's customer base.

Jabil Circuit Inc. is doubling its customer base and fulfilling its goal of expanding into the fast-growing Chinese electronics market through one $250-million deal.

The St. Petersburg circuit boardmaker said Thursday it will buy GET Manufacturing Inc., an electronics manufacturing company based in Hong Kong, in an all-stock acquisition.

Like Jabil, closely held GET specializes in subassembly services for about 30 customers. In almost 30 years, it has developed relationships with such major telecommunications companies as Nokia, Lucent Technologies, Motorola, Alcotel, Xerox and Siemens AG.

"The customer list is all top-tier electronics companies, and there is very little overlap with Jabil," said Stuart Bogard, an analyst with Stephens Inc. in Little Rock, Ark. "Other than Lucent, they're almost all new."

Jabil's major customers include Cisco Systems Inc. and Hewlett-Packard Inc.

The Chinese market is attractive in several ways. Its developing infrastructure makes the country one of the fastest-growing markets for electronics and telecommunications. And with its cheap labor prices less than $1 an hour, China is a popular place for manufacturers to outsource work.

Jabil president Tim Main said China is expected to be the largest national market for telecommunications and other target industries for his company over the next four years. "Acquiring GET gives us the outstanding capability we need, immediately, in a low-risk way," he said.

GET has six manufacturing sites totaling 1-million square feet. Its four principal plants are in Shenzhen, Dan Shui and Panyu, China, and in Hong Kong. Two smaller operations are in Tijuana, Mexico, and Mountain View, Calif.

The acquisition adds about 5,000 employees to Jabil's 7,500-employee operation.

Increasingly, global electronics and telecommunications companies want to pare down their suppliers and vendors to companies that can handle their needs worldwide _ in the United States, Europe and Asia.

"Up until now, Jabil has had all those regions, except Asia," said Neal Johnson, a technology analyst with Robinson-Humphrey in Atlanta. Jabil's sole Asian presence was a manufacturing facility in Malaysia. Its other sites, in addition to its St. Petersburg headquarters, are in Michigan, California, Idaho, Scotland, Italy and Mexico.

Jabil said the deal, expected to close by Aug. 31, will not add substantially to earnings in the first year. But it will have a dramatic effect on the top line, adding up to $300-million in annual revenue, Bogard projected. In its last fiscal year, ending Aug. 31, 1998, Jabil made $54.7-million on $1.2-billion in revenue.

Shares in Jabil closed at $41.50, up $4.87{.

Jabil Circuit Inc.

HQ: St. Petersburg

SALES: $1.2-billion

EMPLOYEES: 7,500

OWNERSHIP: Public. Stock (JBL) trades on New York Stock Exchange

MANUFACTURING PLANTS: St. Petersburg; San Jose, Calif.; Boise, Idaho; Auburn Hills, Mich.; Bergamo, Italy; Penang, Malaysia; Guadalajara, Mexico; Livingston, Scotland

MAJOR CUSTOMERS: Cisco Systems Inc., Hewlett-Packard Inc., others

WEB SITE: www.jabil.com

GET Manufacturing Inc.

HQ: Hong Kong

SALES: More than $200-million

EMPLOYEES: 5,000

OWNERSHIP: Private

MANUFACTURING PLANTS: Hong Kong; Shenzhen, Dan Shui and Panyu, China; Tijuana, Mexico; Mountain View, Calif.

MAJOR CUSTOMERS: Lucent Technologies, Xerox, others

WEB SITE: www.getm.com

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