Another Los Angeles public company is leaving the area.

With the sale of its remaining California business unit last week, Magnetek Inc. is relocating its headquarters from Chatsworth to suburban Milwaukee, home to one of its largest operations.

Meanwhile, Power-One Inc., a Camarillo company that has been expanding its power electronics business via acquisition, purchased a Magnetek division that makes power supplies and related products used in servers, digital storage and telecom systems.

The $88.4 million deal, which included $16.7 million in assumed debt, fills a hole in Power-One's product line and makes it a major player in the industry, with manufacturing facilities around the world. For Magnetek, unloading the low-margin power electronics unit enables the 22-year-old company to reduce its liabilities and focus on more profitable products with better prospects for growth.

"This is really a completely new company," said Salomon Kamalodine, a Los Angeles-based analyst with B. Riley & Co., noting the company no longer had a reason to remain in the state. "Not only did they get rid of this low-margin, commoditized business, they now for the first time in years have a clean balance sheet, have paid up their pension obligations, and have pretty good prospects in their remaining businesses."

The move should have a fairly negligible effect on jobs because Power-One is taking over the Chatsworth plant, which has around 200 employees. Only 10 corporate employees were based in Chatsworth, a company official said, and only a handful are expected to relocate to Wisconsin.

Nonetheless, the headquarters is leaving the L.A. area. The late 1990s saw an exodus of public companies from the area that raised concern about the future status of the region. More recently, Atlantic Ritchfield Co., Times Mirror Co. and Unocal Corp. were bought by competitors.

Magnetek now will focus on power control systems used in materials handling, people-moving, mining and alternative energy all markets that are converting to digital technology. It's already the country's largest supplier of digital drive systems for industrial cranes, hoists and movable bridges, and the world's largest independent builder of digital motion control systems for elevators.

Kamalodine had downgraded Magnetek shares from "buy" to "hold" in May after the company reported a third quarter even worse than he anticipated. The company's fourth quarter, which ended July 2, wasn't much better, but the blow was lessened by the company's announcement of the Power-One deal.

Magnetek shares, which had dropped as low as $2.30 in May, have gained 62 percent over the past year to close at $4.76 on Oct. 25.

"It had gotten to the point where an investor had to ask why would you buy this stock," said Kamalodine, who raised his recommendation back to "buy" after the announcement. "This deal changed all that."

Alternative energy

Among the company's growth areas are recently introduced Quattro elevator drives that are expected to double the company's elevator controls business to $34 million over the next two years. That's a big gain for a company that reported revenue of $84 million in fiscal 2006, which ended July 2.

Chief Executive Tom Boren told investors at this month's annual meeting that the company had just signed its first supply contract for its fuel cell power inverters with a wind turbine company, a boost for its alternative energy business.

"Alternative energy, while now a very small piece of their business, is the kind of sexy business that once it starts picking up will get investors excited about the company," Kamalodine said. "That's where the sizzle is."

Magnetek, which had total liabilities of $189.5 million at the end of the fourth quarter, will use sale proceeds to pay off long-term debt and make large cash contributions to its pension plan to substantially or even entirely meet its obligations. The company also will reduce corporate overhead both from the sale and the move to Menomonee Falls, Wis., home to its research and development group and a large manufacturing plant.

In gaining Magnetek's unit, Power-One, which makes AC/DC and DC/DC power supplies, converters and power management products embedded in a variety of equipment, bought a business that fits into existing operations.

Magnetek is known for AC/DC products that convert AC power from the wall socket to DC power a computer can use. Power-One's expertise is taking the DC power from the front end of the computer, router or data processor and getting it down to the chip on the circuit board.

The power electronics line, which comprised a third of Magnatek's revenues, was a small player in the industry, where as many as 1,000 mostly small companies compete for business. Magnetek now will become a customer of Power-One for the some of the products it used to make.

"It's a very fragmented industry and it's consolidating now," said Robert Murray, Magnetek vice president. "We could not afford to be a consolidator. But Power-One is a large enough company with a strategy to become even more of a leader in the embedded power electronics business."

Power-One, which has made six acquisitions in the past eight years, saw Magnetek's business as a way to gain customization expertise it lacked as a standardized component maker. With revenue of $261.5 million in 2005, the company's stock has gained 35 percent over the last year, closing at $7.63 on Oct. 25.

"It's a great fit for us," said Dave Hage, the Power-One executive vice president who helped negotiate the Magnetek deal. "Essentially the stars sort of aligned for each company, with each of us getting what we wanted."

In addition to the Chatsworth plant, Power One will take over design or manufacturing facilities in Italy, Hungary and China. Hage said major changes are not expected at the local facility.

The business unit made an attractive acquisition candidate because of its state-of-the-art technology, respected engineering staff, and extensive client list, he said.

Despite the cost of the deal, Power-One said the acquisition should be accretive to earnings in the first quarter of 2007.

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