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Maxwell to Sell Microelectronics Product Line, Stock Gains

Shares of Maxwell Technologies, Inc. MXWL gained 3.58% yesterday in afterhours trading after the company announced an agreement with Data Device Corporation ("DDC"), a subsidiary of ILC Industries, Inc.

Per the agreement, Maxwell will sell its Microelectronics product line to DDC, including all its assets and certain liabilities associated with the product line. The total cash consideration from the sale is estimated to be $21.0 million, depending on the working capital and closing transaction adjustments.

The transaction, subject to customary and negotiated closing conditions, is expected to close by the end of this month.

Maxwell develops and manufactures pioneering, cost-effective and space-qualified solutions for satellites and spacecraft through its Microelectronics business. It manufactures radiation-hardened solo board computers and components like high-density memory and power modules. Proprietary packaging and shielding technology, and novel architectures are integrated in most of the products that allow resistance against environmental radiation and ensures reliable performance in space.

According to the President and CEO of DDC, Vincent Buffa, the acquisition of Maxwell’s microelectronics business bodes well for the company. The transaction will improve its solution capacity greatly, apart from combining the two companies’ expertise in connectivity, power and motion control solutions, thereby allowing it to cater to the space industry and other markets that witness demand for radiation-hardened solutions.

DDC is the leading designer and manufacturer of high-reliability data networking, power control, and motion control solutions for aerospace, defense, and industrial applications. For over 50 years, the company has been striving to advance the connectivity, power and control technology through improvements in efficiency, reliability and performance.

Maxwell, on the other hand, is presently involved in a restructuring process that focuses on improving profitability. The plan also calls for investment in high-growth markets, consolidation of the U.S. manufacturing units and reducing operating expenses by trimming headcount. These actions are expected to help the company improve its profitability.
Maxwell Technologies currently has a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in elec-misc components sector are CalAmp Corp. CAMP, Fabrinet FN and IEC Electronics Corp. IEC, each sporting a Zacks Rank #1 (Strong Buy).

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