Insights into the forces shaping our industry.
Who’s Next – Lighting
Our industry has yet to see a slowdown in regards to mergers and acquisitions. But will COVID-19 affect current and future M&As? Companies are adjusting and proceeding using online meeting technology to fill the in-person void. We expect M&A deals will continue and be approached the same way…virtual meetings. We are treating this situation similarly to the last recession.
Between 2007 – 2008, Sonepar, Viking Electric, CED, REXEL, USESI, among a few other distributors didn’t let their acquisition business falter. During the 2008 recession, companies managed to complete acquisition deals; and we trust organizations today will carry on despite the COVID-19 pandemic.
Among power distribution, electrical distribution, wire/cable and lighting; our records show that there were well over 60 M&As in 2019. Legrand, Emerson and Siemens acquired manufacturers across three of the verticals, with Acuity Brands taking over in lighting. Companies strategizing to increase market share, expand markets served, etc.
Here’s a review of M&As over the last few years (primarily focused on 2017 – now).
Lighting companies have maintained a steady buy from 2017 to now. More notably, Acuity Brands had expanded their offerings in lighting efficiency and design with WhiteOptics and a location-as-a-service platform, LocusLabs. More interestingly, Acuity Brands acquired The Luminaires Group (in 2019) that gave them ownership of five brands in interior/exterior lighting, outdoor luminaires, architectural lighting design and more across the United States and Canada. Also notable in 2019, Cree Lighting was sold to IDEAL INDUSTRIES, which was finalized in May of that year. There were other one or two lighting acquisitions in 2019. Signify purchased Once Inc and iLOX to expand in agricultural lighting, as well as WiZ Connected to expand its presence in the wi-fi based smart lighting market. Lutron and Leviton also expanded their markets with a 2019 purchase. Leviton acquired Canada’s largest independent lighting manufacturer, Viscor, which provides solutions in architectural, commercial, medical, institutional and industrial applications. Lutron widened its outdoor lighting control offerings by acquiring Limelight in early 2019.
With a busy 2019 for lighting, 2018 was a lot lighter in the M&A business. Acuity Brands acquired IOTA Engineering, which produces emergency lighting products (and power equipment). Siemens had at least two handfuls of acquisitions in 2018 but one in lighting; they expanded into lighting with a lighting controls and IoT solutions company, Enlighted.
Serving both the lighting, power distribution and wire/cable sectors, Legrand has steadily acquired lighting companies from 2017 to now. In 2017, Legrand acquired Fineline, a high performance environmentally sustainable lighting company; and a decorative and custom lighting manufacturer, Original Cast Lighting (OCL). The same year, Fulham Co, Inc. of California acquired assets of UK-based company Control Network Solutions to expand its presence in Europe with smart lighting controls. Another international buy in 2017…Chinese venture capital firm, IDG Capital, purchased LEDVANCE only to sell to Chinese LED lighting company MLS the following year.
So far in 2020…
There has been some M&A movement the first quarter of 2020. Power distribution, electrical distribution and lighting has already seen some noteworthy purchases. Earlier this month, Cooper Lighting became a business unit of Signify and Legrand’s unexpected acquisition of Chicago lighting manufacturer Focal Point. Ecosense just expanded its LED lines with the purchase of Soraa, a California-based LED designer and manufacturer.
ABB, Eaton, Danfoss A/S and IES Holdings have started off their years strong with at least one acquisition. ABB solidified its purchase of Cyclone Controls in early March. Eaton purchased Power Distribution Inc. Expanding its data center power distribution and monitoring solution; and in turn, Eaton sold its Hydraulics Business to Danish industrial company, Danfoss A/S.
Wire and cable’s saw a change in PE firm ownership with Odyssey Investment Partners’ acquisition of NSi from Blue Sea Capital.
The Anixter war heated up in January until Wesco’s big and final bid was accepted. Winsupply already has two acquisitions under its belt with the purchases of Morgan Brothers and Rosen Supply to expand in the plumbing and heating market.
If the past few years and the recession are any indication, electrical distributors will continue to acquire in the next three quarters. M&A deals may slow down in quarter two as we all work out the kinks of our current situation with the Novel Coronavirus; but we expect business to continue as usual.