MFS Technology posted such dismal results for the third quarter that Nasdaq-listed Multi-Fineline Electronix (M-Flex) has withdrawn its US$500 million (S$791 million) voluntary conditional offer for the firm.

Both companies are units of Singapore mainboard-listed technology and auto group WBL Corp.

In March, WBL proposed to inject its entire 55.7 per cent MFS stake into M-Flex. If the deal went ahead, it would have delisted MFS from Sesdaq.

But California-based M-Flex said last night that it has applied to the Securities Industry Council (SIC) to immediately withdraw its bid to acquire all the outstanding shares of MFS. It had offered as much as $1.20 each for the stock.

Under Singapore law, M-Flex cannot withdraw its offer without SIC approval.

M-Flex, which also issued a new recommendation that its shareholders vote against the deal, is 55.8 per cent-owned by WBL through its units Wearnes Technology and United Wearnes Technology.

The catalyst for last night's move came after MFS reported earlier this month that net profit for the three months to June 30 dropped 84 per cent to $1.04 million. Revenues had fallen 8 per cent to $71.9 million.

M-Flex's original move to acquire MFS 'made strong strategic sense' at the time, the company's chairman and chief executive, Mr Phil Harding, said in a statement yesterday.

He said M-Flex had initially seen the deal as a way of 'expanding its manufacturing capacity to meet expected market demand in 2008'.

Both M-Flex and MFS make similar components used in mobile electronic devices such as phones, PDAs and portable barcode scanners.

The proposed merger would have created the world's second-largest maker of flexible printed circuit boards in terms of revenue.

Mr Harding said in the statement: 'Nonetheless, we still believe that additional capacity will be necessary in 2008 and are currently beginning to evaluate other opportunities for expanding our manufacturing capacity.'

MFS Technology reported yesterday that net profit for its third quarter ended June 30 fell 84 per cent to $1.04 million.

Revenue also fell by 8 per cent to $71.9 million.

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The Business Times