Parlex agrees to be acquired by Johnson Electric

Parlex Corporation (PRLX) announced that it has entered into a definitive agreement to be acquired by Johnson Electric Holdings Limited. The offer of $6.75 per common share is valued at approximately $74.6 million, including assumption of Parlex Corporation's convertible and nonconvertible debt, net of cash, equaling approximately $27.5 million. 
 
Under terms of the definitive agreement, each outstanding share of Parlex Corporation's common stock will be converted into the right to receive $6.75 in cash and each share of Parlex Corporation's preferred stock will be converted into the right to receive $80 per share, its liquidation value under the terms of the preferred stock. Parlex Corporation currently has approximately 6.5 million shares of common stock outstanding, excluding options and shares issuable upon conversion of the convertible debt and 40,625 shares of preferred stock outstanding. The transaction is subject to Parlex Corporation shareholder approval and other customary closing conditions, including regulatory approvals.

Parlex Corporation's Board of Directors unanimously approved the transaction and has recommended to Parlex Corporation's stockholders that they approve the transaction. Needham & Company LLC served as financial advisor to Parlex Corporation's Board of Directors and has delivered its opinion that the $6.75 per share cash consideration to be received by Parlex Corporation's common stockholders is fair from a financial point of view.

Johnson Electric Capital is the investment arm and a wholly-owned subsidiary of Johnson Electric Holdings Limited, a world leader in the design and manufacture of micro motors and motor systems. The Johnson Electric Group, headquartered in Hong Kong, has annual revenues in excess of US $1.1 billion and employs approximately 33,000 people in 15 countries worldwide.

Herbert W. Pollack, Parlex Corporation Chairman, said, "After an extensive review of strategic options, the Board of Directors has concluded that this course provides the optimal alternative for Parlex. With the financial strength and extensive customer relationships of the Johnson Electric Group, Parlex Corporation will be in a much stronger position to pursue global growth opportunities in the flexible interconnections industry."

Peter J. Murphy, Parlex Corporation President and CEO, said, "In the period following the technology sector downturn in 2001, Parlex faced significant financial challenges that has constrained its ability to fund its growth and necessitated a major restructuring. In addition to the sale of assets of Parlex's multilayer operation to Amphenol Corporation, also announced today, the merger agreement with Johnson Electric is the culmination of that restructuring process. We believe that together these transactions are the most attractive solution for our shareholders and represent the best means to secure the long-term future of the business for its employees, customers and suppliers."

Patrick Wang, Chairman and Chief Executive of Johnson Electric Holdings, said "The acquisition of Parlex is an exciting opportunity for Johnson Electric Group to extend its reach and acquire new capabilities in electronics and electronic assemblies which are becoming an increasingly important factor in the electric motor systems we produce. We are especially attracted to Parlex because of its breadth of technological expertise, international operations, and its customer base which overlaps extensively with Johnson Electric's own. We very much look forward to working closely with everyone at Parlex to build and grow the business with the help of the extensive resources of the Johnson Electric Group."

Needham & Company LLC served as financial advisor and Ropes & Gray LLP and Kutchin & Rufo served as legal advisors to Parlex Corporation. Morgan Joseph & Co. Inc. served as financial advisor and Morrison & Foerster served as legal advisor to Johnson Electric.