Adac boosts vertical integration with acquisition of EBW Electronics

Injection molder Adac Automotive Inc. has acquired an electronics supplier in a deal that executives say helps work toward vertical integration and contributes to an ongoing diversification strategy.

The Tier 1 auto supplier, founded in 1975 and a longtime supplier of door handles and exterior mirrors, closed on the deal for Holland, Mich.-based EBW Electronics, a manufacturer of printed circuit board assemblies (PCBA), on April 1. It marks the family-owned Adac's first acquisition.

Jon Husby, CEO of the Grand Rapids, Mich.-based Adac, said the deal "supercharges" the company's ongoing diversification strategy by tapping into more Tier 2 automotive business while accessing more non-automotive customers, which make up about 15 percent of EBW's book of business.

As well, EBW will help Adac vertically integrate electronics into its offerings.

"We are excited to bring together two great family-owned companies with aligned cultures and work ethic," Husby said. "We believe this acquisition will help Adac exceed our diversified revenue goals by doubling the size of Adac Electronics within four years."

Terms of the deal were not disclosed.

An announcement on Adac's website noted that it has integrated electronics into its molded parts for more than 20 years.

"Vertical integration of PCBA manufacturing into our operations will improve product design, shorten development cycles, reduce testing timing, optimize total enterprise cost and guarantee product performance," the company said. "Simply put, products with integrated technologies deliver the best value."

The new entity will operate as Adac Electronics, and add EBW's 150 employees to Adac's more than 1,000-person Michigan workforce. EBW leadership will remain or move into new roles at Adac Electronics.

EBW was founded in 1992 by Leo LeBlanc with two employees operating from an 8,000-square-foot manufacturing space. Its early product involved an electronic monitoring system for fuel tanks.

Now led by President Cory Steeby, EBW specializes in designing and manufacturing circuit boards and electronic assemblies for a variety of industries. The company has expanded multiple times in recent years to meet demand, and its products include performance sensors, switches, actuators and lighting solutions. EBW's circuit boards appear in most major vehicle brands as well as office and residential LED lighting products.

"For 34 years, EBWE has thrived under the LeBlanc family's commitment to our people, our customers, and doing things the right way," said Steeby, who will serve as Adac Electronics' general manager. "Joining forces with Adac allows us to carry that legacy forward while embracing new opportunities that honor our history and strengthen our future."

The deal came together in recent months after Husby toured EBW's facility and began discussions with Steeby about a potential partnership. As well, the LeBlanc family has played less of a hands-on role in EBW's operations but was interested in maintaining the company's regional roots.

EBW found a willing partner in Adac, whose executives saw a strong cultural alignment between the two family-owned companies with deep West Michigan roots. The deal also gives Adac an opportunity to grow its West Michigan manufacturing presence.

"This is the right time to ensure that we provide manufacturing solutions within the U.S. for our current and future customers," Husby said. "Our experience with the rigors of being a Tier 1 automotive supplier will enable us to be a desired electronic partner for automotive, aerospace, medical, and many other industries either as a Tier 1 or Tier 2."

The deal also marks a turn in Adac's growth strategy as its first acquisition after divesting from two of its three joint ventures in recent years. Executives see the EBW acquisition as a way to offer more product solutions to Adac's customers. The company launched a diversification strategy in 2023 that leveraged engineering, 3D printing and quick prototyping to industries including medical, marine, industrial and defense.

It also grows Adac's Michigan manufacturing presence, which includes other Michigan facilities in Muskegon and Saranac, in addition to its new $23.5 million headquarters and R&D space in suburban Grand Rapids that opened in 2020. Adac also operates facilities in Mexico and Brazil.

Adac's acquisition comes as industry analysts expect auto-sector merger and acquisition activity to pick up this year after deal value and volume in 2024 decreased from consumer demand and higher financing costs. A PricewaterhouseCoopers outlook expects lowered inflation and interest rates to be key drivers of auto-sector M&A this year.

An M&A outlook survey conducted by law firm Dykema similarly found that executives across industries expect automotive dealmaking to pick up this year, as consumer demand ramps back up, particularly for hybrid vehicles. Other deal drivers include a need to increase supply chain resiliency, the industry's ongoing shift to electric vehicles, and more collaboration between automakers and suppliers with technology partners, according to Dykema.