Hytek purchaser drawn by complementary strengths

The purchaser of Hytek Microsystems Inc.

liked the Carson City company's mix of customers.

Hytek's executives,meanwhile,were drawn to the idea of working with a financially strong company that would allow Hytek to get on with its business without worrying about the wolf at the door.

Natel Engineering Co.

Inc.

of Chatsworth, Calif., last week said it reached a deal to buy publicly traded Hytek for $2 a share.

That values Hytek at about $6.5 million.

Hytek manufactures microelectronic assemblies,mostly for the defense, space and medical industries.

Once the acquisition is closed probably during the second quarter Hytek no longer will be a publicly traded company.

Privately held Natel Engineering, which posted sales of about $47 million in its last fiscal year, also manufactures microelectronic products and has been purchasing smaller companies in the field for the last dozen years.

Doug Russell, chief operating officer of Natel, said Hytek's customers are different from those of his company even though the two companies are involved in the same industry.

He said Natel also was drawn to the geographic diversity that it would gain by acquisition of a Nevada operation.

The company's three other facilities are in Southern California.

Hytek operates in about 24,000 square feet on Hot Springs Road in Carson City.

It employs approximately 90.

Russell said his company intends to maintain the Carson City facility and seek opportunities to grow its business.

"We won't be moving," he said, adding that the Nevada facility has unused capacity that will allow for fairly quick growth in its business.

John Cole, president and chief executive officer of Hytek, said the Carson City facility fits well with Natel's other manufacturing plants.

The Hytek plant, he said, is best suited for short-run products as well as engineering development work.Natel's existing facilities can handle long production runs efficiently.

But equally important, Cole said, is the strong balance sheet Natel brings to the deal.

Hytek has struggled in recent years, and its auditors last year raised a flag about the company's ability to stay in business.

It's likely, the company said last week, that its auditors will raise the flag again when they issue their report for the just-ended fiscal year.

For the first three quarters of that fiscal year,Hytek reported a loss of $149,000 on revenues of $7.6 million.

In late January, one of Hytek's major customers, Medtronic A/S, said it was leaving the Carson City company to move its manufacturing in-house.Medtronic accounted for 21 percent of Hytek's annual sales in its last fiscal year.

But Sudesh Arora, president of Natel, isn't worried.

"Without the burdens of being a public company,Hytek should be able to profitably grow with its solid customer base,"he said.

Russell said the transaction has been in the works for about six months, sometimes moving slowly because of the regulations surrounding Hytek's public ownership.Hytek's common stock, which had been trading for just under $1 a share before the merger announcement,was quoted at about $1.82 a share last week.