Beijer Electronics, the Malmö, Sweden-based automation products supplier, is acquiring Swedish industrial data communications company Westermo for about $32.6 million.
Westermo is active internationally with estimated sales of some $34 million, and an operating margin before depreciation and amortization of some 10 percent in 2007, according to a Dec. 20 Beijer announcement. Westermo has 148 employees.
Commenting, Göran Sigfridsson, Beijer Electronics’ chief executive officer and president, said: “The acquisition of Westermo is a strategic milestone in the Beijer Electronics group’s continued development. Westermo’s broad product range and high organic growth complements and enhances Beijer Electronics’ automation offering for industrial and infrastructure.”
Founded in 1975, Westermo is a niche data communications player that offers products developed in-house such as switches, routers, fiber-optic modems, and modems for local area networks (LANs) and wireless communication. The company also manufactures at its plant in Stora Sundby, outside Eskilstuna, west of Stockholm. The company conducts marketing and sales under the Westermo brand, and has proprietary sales companies in Sweden, the United Kingdom, Germany, France and Singapore, plus some 30 distributors worldwide. The Nordic market represents some 20 percent of sales, while the rest of Europe provides 70 percent.
At present, Westermo has an estimated global market share of some 5 percent, Beijer said. The company has outgrown the market, posting average yearly growth of 17 percent in the last ten years. Estimated growth for 2007 is consistent with this average.
“Data communications are becoming a more important part of the automation solutions in manufacturing and infrastructure projects. That’s why we anticipate yearly growth of 15 percent to 20 percent in industrial communications, and especially in the Industrial Ethernet segment, where Westermo has a strong product offering,” continued Sigfridsson. “At the same time, many customers want to deal with fewer but larger vendors of total solutions. So with the acquisition of Westermo, Beijer Electronics is sharpening its overall competitiveness.”
Largely, Beijer Electronics and Westermo target the same customers with complementary products. In the slightly longer term, the coordination gains will extend to procurement, product development and production.
Westermo will be an independent business area of Beijer Electronics. Its management will retain their positions, with Lars Ola Lundqvist as chief executive officer, whose experience includes many years with ABB Robotics. The company will be consolidated into Beijer Electronics’ accounts from Jan. 1, 2008. The acquisition will be financed with existing funds and loans and is expected to have a positive impact on Beijer Electronics’ earnings per share in 2008.