By John McHale
ROSELAND, N.J. — The makeup of the military single-board computer market changed dramatically last month when two of its major players agreed to come under the same roof.
Officials at Curtiss-Wright Corp., the parent company of military board vendor Vista Controls in Santa Clarita, Calif., signed a definitive purchase agreement with Solectron Corp. in Milpitas, Calif., to acquire its Dy 4 Systems, Inc. business of Kanata, Ontario — Vista's number-one competitor in the board market — for approximately $110 million. Dy 4 has annual sales of $72 million.
The new acquisition, combined with Vista Controls and Curtiss-Wright's acquisition of Systran Corp., makes Curtiss-Wright a major provider of mission-critical embedded computing solutions for the aerospace and defense markets, Curtiss-Wright officials say.
Curtiss-Wright also recently purchased graphics-board supplier Peritek in Oakland, Calif., Systran, a data-communications designer in Dayton, Ohio, and Novatronics a manufacturer of electric motors and position sensors for the defense, commercial, and aerospace markets in Stratford, Ontario.
Dy 4, like Vista, will operate as a business unit of the Curtiss-Wright Controls Inc. subsidiary in Gastonia, N.C. Dy 4 will not combine with Vista, but will retain its branding and identity to maintain consistency with its customer base, says Doug Patterson, director of marketing for Vista Controls.
Patterson declined to comment further until the U.S. Department of Justice has approved the deal.
"As part of the Curtiss-Wright family, Dy 4 Systems will be able to leverage the capabilities of other Curtiss-Wright companies who are also major suppliers in our market-space such as Vista Controls, Systran, and the Peritek Corp.," said Tom Quinly, Dy 4 president in a letter to his employees on Dy 4's Web site. "This will result in more targeted products and services to better serve our customer base."
Dy 4 officials also declined to comment until the deal has been approved.
"The Dy 4 acquisition is a beacon of intelligent thinking in what has been a period of stupid acquisitions and mediocre mergers," says Ray Alderman, executive director of the VME International Trade Association in Fountain Hills, Ariz. The deal is good for both companies, Alderman says.
The Dy 4 acquisition boosts Curtiss-Wright's presence in the market for military commercial off-the-shelf (COTS) components, and Dy 4 has an owner that "recognizes its value and that will nurture its growth instead of stunting it," Alderman says. The move also gives Curtiss-Wright more leverage in system-level contracts for avionics and vetronics applications, Alderman adds.
Many large systems integration companies wanted to buy Dy 4, but Curtiss-Wright won out over GE Fanuc of Charlottesville, Va., Alderman says. GE Fanuc, which bought board supplier VMIC in Huntsville, Ala., may go hunting for another military embedded board supplier to keep up with Curtiss-Wright, he says.
This acquisition demonstrates how much companies such as Vista, Dy 4, and VMIC are at the mercy of big companies like Curtiss-Wright and GE Fanuc, says Jerry Krasner, vice president of market intelligence for Embedded Market Forecasters in Framingham, Mass. Now the acquired companies have the clout to get even bigger, meatier contracts, he says.
The deal does not change the roadmaps of Dy 4 and Vista competitor SBS Technologies in Albuquerque, N.M., says Frank Willis, vice president of marketing at SBS. Radstone officials have a similar response to the deal.
"First, I am not sure I would count Vista as a major player, particularly of board-level products," says Radstone Managing Director Peter Cavill, who calls Vista "a second-tier supplier of boards ... with some systems-integration capability." Systran, he says, "is very much a niche player in areas like Fibre Channel and reflective memory with minimal rugged capability."
Dy 4 is Radstone's major competitor, Cavill says. Radstone "has been sold for the third time in three years — and that sort of thing can't be good for any business," Cavill continues. "At least they have now been sold off by an owner that didn't want them and didn't know how to manage them."
Cavill says he expects pressure to merge with other board suppliers, but intends to keep his company independent. He says Curtiss-Wright leaders will need time to take full advantage of their recent acquisitions.
"Whether the result will be a stronger, better military embedded computing competitor remains to be seen," Cavill says. Dy 4 did not fare well under its previous owners, and "who's to say that they will under Curtiss-Wright," Cavill points out.
"I suspect that this acquisition will act as a catalyst for the other leading players to either merge with one or more of their peers and/or to increase their market share by acquisition," Cavill predicts. "I would not, therefore, necessarily assume that a year from now Curtiss-Wright will be the biggest player in MilCOTS."