By John McHale
KANATA, Ontario — Officials at C-MAC Industries Inc. in Montreal intend to launch a take-over bid of DY 4 Systems Inc., the Kanata, Ontario-based supplier of rugged single-board VME processors.
C-MAC's takeover bid is part of its leaders' effort to expand into the military market and leverage DY 4's digital signal processor (DSP) expertise — through the company's subsidiary, Ixthos in Leesburg, Va. — to their telecommunications customers.
"We strongly believe that this is an excellent strategic fit for DY 4 as we continue to focus on expanding our presence in the harsh environment market, as well as entering exciting new commercial markets," says Danny Osadca, president and chief executive officer of DY 4.
DY 4 will retain its name and preserve its core competencies, while functioning as a subsidiary of C-MAC. "It is our intention that nothing will change," Osadca says. "DY 4 will be the same company in culture and accessibility. There will be no need to revise contracts or working practices."
"We will continue to concentrate on our key defense and aerospace operations, at the same time pursuing growth opportunities in other clearly defined markets, including telecommunications and internet segments," Osadca explains.
"C-MAC is a financially strong company with access to investment capital, people, facilities, and markets identified as key elements of DY 4's own growth strategy, " Osadca says.
Currently DY 4 is about a $100 million company, while C-MAC is a $2 billion organization, he explains. As a result DY 4 could be a player in larger contracts, while still supporting their current customer base, Osadca says.
This is a strong move for both companies, says Ray Alderman, executive director of the VME International Trade Association in Scottsdale, Ariz. C-MAC expands into the military arena with DY 4's board business and gains Ixthos's DSP technology, while DY 4 immediately becomes a huge company giving them greater ability to raise capital quickly, he explains.
C-MAC is an internationally diversified designer and manufacturer of integrated electronic manufacturing solutions, from components to full systems, primarily serving the communications, automotive, instrumentation, defense, and aerospace equipment markets worldwide. C-MAC services also include product design, supply chain management, and assembly and testing.
About 70 percent of C-MAC's business is in telecommunications, Osadca says. However, this does not mean that DY 4 is giving up its military business to move toward that industry, he continues. DY 4 will remain focused on its military and aerospace customers.
DY 4 has about 90 percent of its business in the military market and that will not change, Osadca claims.
DY 4 will also not start making CompactPCI now unless their military customers want it and they do not, Alderman says. VME is still the leader in the military single-board computer business, he claims.
Not only will C-MAC will be able to use the Ixthos DSP expertise but the combination will enable DY 4 engineers to take advantage of the strong chassis and backplane business that C-MAC has developed as well, Osadca says. The combination of their backplane technology with DY 4's rugged, commercial-off-the-shelf (COTS), single-board computer business helps make it a perfect fit, he explains.
"Telecommunications guys are just like the military but with different uniforms," Alderman says. They share the same specs and that is why DY 4 is such a good fit for C-MAC — they can marry their backplane expertise with DY 4's COTS electronics, he says.
"The alliance with C-MAC also gives DY 4 access to a component acquisition pool of more than $1.5 billion to sharpen our competitive edge," Osadca says. "We will have true worldwide manufacturing and support capability plus the ability to leverage C-MAC's talent and resource pool."
DY 4 experts also plan to invest in new products, technologies, and services, Osadca says. "This year alone we plan to invest 14 percent of our revenues in [research and development] to ensure a continuous stream of new and innovative products for the COTS market — greater than any one of our competitors," he adds.
C-MAC also has extensive custom design and manufacturing capability, which will bolster DY 4's custom offerings, Osadca says. In the past DY 4 was not always able to accommodate large amounts of custom designs because the majority of their manufacturing capability is dedicated to their COTS business, he explains.
