Expanding SBS acquires OR and VI Computer: more acquisitions may be on the way

ALBUQUERQUE, N.M. - Officials at SBS Technologies Inc. in Albuquerque, N.M., strengthened their military and high-reliability business when they acquired a majority interest in OR Industrial Computers GmbH in Augsburg, Germany, and bought VI Computer of Encinitas-Calif., outright from Themis Computer in Fremont Calif.

By John McHale

ALBUQUERQUE, N.M. - Officials at SBS Technologies Inc. in Albuquerque, N.M., strengthened their military and high-reliability business when they acquired a majority interest in OR Industrial Computers GmbH in Augsburg, Germany, and bought VI Computer of Encinitas-Calif., outright from Themis Computer in Fremont Calif.

SBS leaders say they want to become a $100-to-$200 million company and the only way to do that is through acquisitions, says Jerry Krasner, research editor at the Electronics Group of Miller Freeman Corp. in Wellesley, Mass. SBS also recently purchased GreenSpring Modular I/O of Menlo Park, Calif., Embedded Computers in Raleigh, N.C., Bit 3 Computer Corp. in St. Paul, Minn., and Micro Alliance of San Diego.

OR has customers in the European Space Agency and NASA, while VI has a large defense business. These acquisitions signal SBS interest in supporting and growing their military product base, Krasner says.

These acquisitions will broaden SBS`s offerings of Intel-based single-board computers and computer subsystems, while adding Motorola-based products so that SBS will be able to serve almost all customer applications in the embedded computer market, says Christopher Amenson, chairman and chief executive officer of SBS.

"The acquisition of our interest in OR brings into SBS a leading CPU developer in Europe and will take our company forward toward becoming a multi-national enterprise," Amenson adds.

The embedded technology market`s growth rate is at a moderate level, and SBS saw room for consolidation, says Rick Schuh, president of the SBS Aerospace Group.

Both companies are proven successes in the VME market and "we`re thrilled to have them on our side," Schuh says. VI is heavy into VME and PowerPC with a large commercial off-the-shelf (COTS) presence, and OR also gives SBS more Intel-based products VME, CompactPCI, PCI form factors, and 1553 technology, he says.

Over the last several years SBS has purchased the GreenSpring Modular I/O mezzanine expertise, the Embedded Systems embedded VME products, the Micro Alliance PCI shop, the Bit 3 connector technology, and now OR and VI`s rugged VME business, says Ray Alderman executive director of the VME International Trade Association in Scottsdale, Ariz. All the acquisitions add up to SBS eventually forming a military and aerospace division and claiming a huge share of the COTS military and aerospace market, he says.

SBS also probably has a strong interest in competing with or even purchasing DY 4, which devotes about 90 percent of its business to the military, Krasner says.

"DY 4 is a quality operation", but SBS complements more than competes with the Canadian board company, Schuh says. "I wouldn`t mind having their conduction-cooling technology," but it will be some time before SBS enters that side of the market, he says. Sources familiar with DY 4 operations confirm that SBS and DY 4 officials have discussed a potential acquisition.

In many systems, "we see our products right next to theirs", but SBS currently has no intention to purchase DY 4, Schuh says. "We`re still settling" the VI and OR deals, he says.

Will SBS`s future shopping lists include any digital signal processing (DSP) companies? SBS is not focused on DSPs, Schuh says. "I`m not excited about its growth potential," he says

SBS paid $9.7 million for a majority share of OR, which has annual sales of about $11 million, while VI, which has annual sales of approximately $5 million, was purchased for $5 million.

VI was in a bad marriage with Themis, Alderman says. Themis wants to concentrate on Telecommunications, and VI`s VME products did not complement their SPARC-based systems, Alderman says.

As part of the $9.7 million OR acquisition, SBS acquired 50.2 percent of the shares of ORTEC Electronic Assembly GmbH, a related company which manufactures OR`s commercial products and electronic products for other customers. SBS also purchased 100 percent of the shares of OR Computers Inc., based in Fairfax, Va., which is the U.S. marketing and support organization the German parent.

SBS officials do not expect to increase their 1999 fiscal earnings due to needed increase staffing in their engineering and sales organizations in both the U.S. and Europe, Amenson says.

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