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.
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