Sanmina announced its stock-for-stock acquisition of SCI Systems in July 2001 with a deal valuation of about $6 billion, including assumed debt and calculated using Sanmina’s share price at the time. That was not the same figure Sanmina later reported for purchase accounting: $4,410,991,000, including the fair value of shares and options and direct transaction costs. The merger closed on December 6, 2001.
How did the Sanmina–SCI Systems deal work?
Sanmina and SCI Systems signed a definitive merger agreement on July 13, 2001, and Sanmina announced it on July 16. Under the agreement, SCI shareholders were to receive 1.36 shares of Sanmina common stock for each SCI share, subject to required approvals. The transaction was therefore a stock-for-stock merger, not a simple cash purchase. The agreement and consideration terms are described in the SEC Form 8-K and the companies’ joint proxy statement.
The merger was completed on December 6, 2001. SCI became a wholly owned subsidiary of Sanmina-SCI, as Sanmina later reported in its Form 10-Q.
Was the Sanmina–SCI deal really worth $6 billion?
The approximately $6 billion figure was a contemporaneous announcement valuation, not a fixed cash price. EE Times reported that it included assumed debt and was based on Sanmina’s July 13, 2001 closing share price. Because the merger consideration consisted of Sanmina shares, the market price used to value those shares mattered. The announcement figure is best understood as an estimate of aggregate transaction value on that basis, not as cash Sanmina paid to SCI shareholders. See the July 16, 2001 EE Times report.
#1 Best Overall
What Sanmina later recorded for purchase accounting
In its 2002 Form 10-Q, Sanmina reported a total purchase price of $4,410,991,000. The filing’s components were approximately $4.2 billion in fair value for 200.6 million shares, $203 million in fair value for 13.0 million vested and unvested options, and $21 million in direct transaction costs. For the share valuation, Sanmina used the $20.87 average closing price over the five trading days ending July 17, 2001. These amounts describe the company’s purchase-accounting calculation; they are not a statement that $4.411 billion in cash changed hands. The filing is available in Sanmina’s Form 10-Q.
The two headline amounts use different methods and reference points: the $6 billion press figure included assumed debt and used the July 13 share price, while the later accounting total valued specified shares and options and included transaction costs. They should not be treated as competing reports of one universal deal price.
Rank #2
- Ideal for Gifting
- Ideal for a bookworm
- Compact for travelling
Why did Sanmina buy SCI Systems?
The companies’ joint proxy framed the merger as a way to strengthen their position in the global electronics manufacturing services market. The boards said a combined company would be better positioned to compete and could improve long-term operating and financial results. Those were management and board expectations, not proof that the promised benefits were later achieved.
- More scale and broader capabilities: The companies aimed to combine manufacturing capacity and end-to-end systems capabilities.
- Expanded services and global fulfillment: They expected a wider service offering and improved ability to fulfill customer orders across geographies.
- A broader customer and revenue base: The stated goal was to diversify customers and revenue, including across growth sectors.
- Greater reach for Sanmina’s vertical integration: The companies expected Sanmina’s capabilities in printed circuit boards, backplanes, enclosures, cable assemblies, components, and subsystems to serve a larger revenue base.
In a post-close analyst conference call, Sanmina chief executive Jure Sola said the merger would give Sanmina “a more diversified revenue stream with a broader group of customers,” as EE Times reported. The companies’ broader strategic case appears in their joint proxy statement.
Quick wins for a faster PC:
Clear out junk files and repair common Windows errorsFree Scan →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →What scale did the combined company report at closing?
At the time of the December 2001 close, EE Times described the combined manufacturer as operating in 23 countries and having annual revenue in the $12 billion range. These are contemporaneous press-reported figures about the company around closing, not current Sanmina statistics. In the same report, the outlet relayed CEO Jure Sola’s expected post-merger revenue mix: communications was projected to fall from more than two-thirds of Sanmina’s revenue to 40–45%; high-end computing was projected at 20–25%, PCs at 15–20%, multimedia at 5–10%, and medical, aerospace, and industrial markets at 10–15%. Those percentages were management projections reported at the time, not verified later results. See the December 6, 2001 EE Times report.
Quick Recap
Best Value
- It can be a gift option
- Comes with secure packaging
- Helpful in various ways
Rank #4
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
