Executive summary of the EMS and ODM industry
The global EMS and ODM market is forecasted to reach a size above €500bn in 2018 with expected growth rates of approx. 6% in the next years mainly driven by increased demand for technology across different sectors including automotive and industrials (IoT and AI).
With the positive growth prospects, there are a number of challenges the EMS industry currently faces, particularly supply bottlenecks of crucial components and the need for a sustainable and strong market position in an industry with ongoing consolidation and high level of competition.
Valuation level of EMS players worldwide
Towards mid of November 2018 the valuation level of the EMS industry decreased approximately to the levels of beginning of 2018.
Based on an average analysis, small and medium-sized EMS companies are remaining to show significantly higher valuation levels (approx. EV/EBITDA 9x) in comparison to large EMS providers (approx. EV/EBITDA 6x), mainly due to highly specialised focus of small and medium-sized EMS players.
M&A activity in the EMS industry
In 2018, there were 17 EMS transactions recorded up to the end of October 2018 an increase to last year’s period. Transactions are mainly driven by consolidation and acquisitions of trade buyers. In terms of geography, the majority of transaction were cross-border acquisitions.
Denmark’s largest EMS company GPV, which is owned by Danish industrial conglomerate Schouw & Co., has agreed to acquire Switzerland-based EMS company CCS Group. The transaction will lift GPV’s revenue to more than €325m.
Clearwater International exclusively advised GPV International and its shareholder, Schouw & Co, on this landmark cross-border acquisition of the Switzerland-based CCS Group. The acquisition further drives consolidation in the industry and creates one of the largest EMS players in Europe.
Clearwater International Germany has advised Danish industrial conglomerate Schouw & Co., on the acquisition of Switzerland-based CCS Group by its portfolio company GPV.
The deal creates a major European electronics group with over 3,700 employees, production facilities in Asia, Europe and the Americas and combined revenue of more than €325m.
GPV and CCS have both successfully served the HMLV (High-Mix/Low-Volume) segment of the Electronics Manufacturing Services (EMS) market. Both GPV and CCS provide electronics sub-assembly solutions and finished products (box-build) to their customers in high and low volume series with growing demand for this type of electronics supplier. The acquisition allows GPV to access new customers, industries and end-markets.