Compass Diversified has agreed to sell Advanced Circuits to Tempo Automation for $310 million. Advanced Circuits is a maker of small quantity PCBs and production quantities.
WESTPORT, Conn. – October 14, 2021 – Compass Diversified (NYSE: CODI) (“CODI”), an owner of leading middle market businesses, today announced it has entered into a definitive agreement (the “Agreement”) to sell its majority owned subsidiary, Compass AC Holdings, Inc., the parent company of Advanced Circuits, Inc. (“Advanced Circuits” or “the Company”), to Tempo Automation, Inc. (“Tempo Automation”), the world’s leading software-accelerated electronics manufacturer. In connection with the Agreement, Tempo Automation has announced its entry into a definitive merger agreement for a business combination with ACE Convergence Acquisition Corp. (“ACE”), a special-purpose acquisition company focused on the Industrial and Information Technology sectors. Upon closing of the transaction, the combined operating entity will be renamed “Tempo Automation Holdings, Inc.” (“Tempo”), and shares of its common stock are expected to trade on Nasdaq under the ticker symbol “TMPO.”
Under the terms of the Agreement, CODI and the other selling shareholders will receive consideration in the amount of $310 million, composed of $240 million in cash and $70 million in Tempo common stock upon the closing of the transaction, excluding certain working capital and other adjustments. In addition, CODI and the other selling shareholders may receive $30 million in additional Tempo common stock within five years, subject to Tempo stock price performance. CODI anticipates the proceeds will be used to repay all or a portion of outstanding revolver borrowings and for general corporate purposes.
“Advanced Circuits has established itself as an industry leader in the PCB fabrication and assembly space, and we are tremendously proud of the growth the company has achieved during our ownership,” said Elias Sabo, CEO of CODI. “Our unique permanent capital structure has allowed us the time and flexibility to take a long-term approach to value creation, consistently investing in Advanced Circuits’ operations and capabilities. John and Jeff Yacoub and the rest of the talented management team have been excellent partners throughout our entire 15-year relationship. We believe this transaction delivers immediate value to CODI shareholders while enabling us to participate in the potential upside of this compelling combination.”
Sabo continued: “We believe in the Tempo team’s vision and in the long-term benefits of bringing together high-quality companies in the industry to redefine the customers’ journey from prototype to production. Together, we believe the combined, publicly-listed company will be positioned as an industry leader – representing a new one-stop shop platform for customers who are looking to innovate and bring new electronic products to market. Leveraging design and development capabilities, PCB production and assembly and breakthrough, software-automated PCBA manufacturing, the unique combination of products and services offers significant potential for customer acquisition and entrance into new vertical markets.”
“We are grateful to the CODI team for their support and partnership over the past 15 years in helping us reach this exciting milestone,” said John Yacoub, CEO of Advanced Circuits. “As a part of this new and expanded platform, we believe we can bolster our leading market position and propel the business into its next phase of growth, and we are confident it will grant us new opportunities to serve our customers with the responsiveness, timely delivery and high-quality custom products they expect from us.”
The closing of the Advanced Circuits transaction is subject to customary terms and conditions, including regulatory approval, and is expected to occur in the first quarter of 2022.
ACE and Tempo Automation today issued a separate press release announcing their transaction.
Cowen and Company, LLC is acting as financial advisor and Paul Hastings LLP is acting as legal counsel to CODI.
About Compass Diversified (“CODI”)
CODI owns and manages a diverse set of highly defensible North American middle market businesses. Each of its current subsidiaries is a leader in its niche market.
Leveraging its permanent capital base, long-term disciplined approach and actionable expertise, CODI maintains controlling ownership interests in each of its subsidiaries, maximizing its ability to impact long-term cash flow generation and value creation. CODI provides both debt and equity capital for its subsidiaries, contributing to their financial and operating flexibility. CODI utilizes the cash flows generated by its subsidiaries to invest in its long-term growth and has consistently generated strong returns through its culture of transparency, alignment and accountability.