Omron Corp.. the Tokyo-based safety, sensing and controls supplier, is upping the ante in the fast-growing market for industrial safety products, with plans to acquire the Safety Products Group of Scientific Technologies Inc. (STI), based in Fremont, Calif.
The two companies announced a definitive agreement on April 25 by which Omron will acquire STI for $94 million plus net cash and working-capital adjustments. The transaction does not include the purchase of STI’s Automation Products Group, the companies said.
Omron said its Industrial Automation Business (IAB) is already the leader in the Japanese safety devices market, and that the STI deal will enable it to capture a key market position in North America. The company “will become a major, global player in a 110 billion yen (approximately US$940 million) global safety device market growing 15 percent per year due to a rising trend for Corporate Social Responsibility that stresses not only improved productivity but also workplace safety,” the announcement said.
Aggressive growth target
Noting that manufacturers have increased their focus on safety, quality and the environment, Omron said it has responded to the trend by establishing a dedicated safety devices division in April 2005. The company also has enhanced its safety devices line-up of components and networks, and boosted its system solutions capabilities and safety-design consulting services. Now, with the STI acquisition, Omron said it plans on growing its safety business aggressively, from 10 billion yen ($85 million) in fiscal year 2005 to 30 billion yen ($255 million) by fiscal year 2008.
“Together, Omron IAB and STI will create a global safety equipment supplier of safety, sensing and control technologies that satisfies customers’ demand for not just labor productivity but also product quality, employee safety and environmental friendliness,” said Fumio Tateisi, IAB president and executive vice president of Omron. “By acquiring STI, we will be able to offer a wider range of cutting-edge safety products and consultancy services to our customers.”
“STI’s comprehensive suite of products will benefit from Omron’s established international distribution channels, overseas sourcing relationships and efficient manufacturing capabilities,” said Joseph J. Lazzara, president and chief executive officer of STI. ‘Our leadership position in the safety market and extensive regional sales and distribution channels in North America will bolster Omron’s reach within this important market. In addition, the acquisition will preserve and enhance STI’s history of product innovation and customer service.”
The transaction remains subject to certain closing conditions, including approvals by regulatory bodies and shareholders of both companies.