Beijer Electronics Makes Strategic Acquisition in Industrial Data Communications

Beijer Electronics is acquiring Swedish company Westermo active in industrial data communications. Westermo is active internationally with estimated sales of some SEK225 m, and an operating margin before depreciation and amortization of some 10 % in 2007. The company has 148 employees. The purchase price of the shares totals some SEK 215 m.

Commenting, Göran Sigfridsson, Beijer Electronics' CEO 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."

Westermo is a successful family business founded in 1975. It is a niche data communications player with specialized know-how in industrial applications. This segment has especially stringent demands for robust products in harsh environments, which require high reliability and safety.

Essentially, Westermo offers products developed in-house like switches, routers, fiber-optic modems, and modems for 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 UK, Germany, France and Singapore, plus some 30 distributors worldwide. The Nordic market represents some 20 % of sales, while the rest of Europe provides 70 %.

At present, Westermo has an estimated global market share of some 5 %. The company has outgrown the market, posting average yearly growth of 17 % 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 15-20 % in industrial communications, and especially in the Industrial Ethernet segment, where Westermo has a strong product offering," continued Mr. 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."

For the short term, the main coordination gains are in sales. 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 CEO, whose experience includes many years with ABB Robotics.

The company will be consolidated into Beijer Electronics' accounts from January 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.