Sparton Acquires Delphi Medical Systems Contract Manufacturing Business

Sparton Corporation, has announced that its wholly owned subsidiary, Sparton Medical Systems Colorado, LLC, has signed a definitive agreement to acquire certain assets related to the contract manufacturing business of Delphi Medical Systems, LLC in an all-cash transaction valued at $8.0 million, subject to certain post-closing adjustments. Delphi Medical Systems, located near Denver, Colorado, primarily manufacturers OEM medical devices for the Therapeutic Device market, including blood separation equipment, spinal surgery products and 3-D eye mapping devices. Additionally, the company provides engineering and manufacturing support to a market leading environmental sensor company whose markets include meteorology, weather critical operations and controlled environment applications.

Strategic highlights of the acquisition include:
•Projected annual revenue of approximately $32 million with a new and diversified customer base
•Provides immediate entry into the high growth Therapeutic Devices market
•Expansion of Sparton Medical Systems into a western geographic footprint will enable it to serve existing and future West Coast customers more proficiently
•Enhances Sparton’s business development activities with the addition of personnel and associated manufacturing representative relationships
•Synergistic operational opportunities have been identified within all of Sparton’s existing business units
•Not expected to result in the recognition of goodwill
“The addition of this business meets the criteria of our growth strategy by providing expansion into the therapeutic device market and diversifying our customer base, while also expanding our geographic reach into the western United States,” commented Cary Wood, President & CEO, Sparton Corporation.

“The acquisition makes enormous sense both economically and operationally. It is well-suited to our existing Medical business and, with a timely integration, we anticipate it will enhance Sparton’s overall profitability. Furthermore, we expect this addition will provide operational opportunities for our Defense and Security Systems (DSS) division, particularly with the environmental sensor business which requires technology similar to what we use in the production of sonobuoys. The transaction will also strengthen our business development efforts, adding West Coast coverage and bringing with it existing manufacturing representative agreements.

“In the last 18 months, Sparton has endured extensive restructuring activities by focusing its efforts primarily on operational and financial improvements that have resulted in a return to profitability. This acquisition marks a major milestone in the turnaround as we shift our focus to future growth. As we initiate Sparton’s strategic growth plan, this acquisition immediately allows access to new markets, geographies and a diversified product offering. We look forward to the efficient integration of operations and expect this acquisition to improve profitability and enhance shareholder value,” Mr. Wood concluded.