Delta Electronics Inc (台達電) yesterday announced plans to acquire three building automation companies in a bid to enhance its global presence in this fast expanding market.
“The building automation industry is growing rapidly and has high potential,” Delta chairman Yancey Hai (海英俊) told an investors’ conference in Taipei. “It is expected to play an important role in Delta’s future growth.”
Building automation refers to a wide range of smart solutions used in various kinds of buildings, such as offices, hotels, hospitals and residential buildings.
The market for building automation is expected to reach US$70.4 billion this year and jump nearly 30 percent to US$91.3 billion by 2020, Delta chief executive officer Cheng Ping (鄭平) said, citing international studies.
Delta reached an agreement to acquire with Austria-based Loytec Group to acquire 85 percent shareholdings in the group’s Loy Tec Electronics GmbH and Innocontrol Electronics GmbH for 72 million euros (US$82 million), the Taiwanese company said on its Web site.
It expects to acquire the remaining 15 percent stakes in both companies in the future, it added.
Delta Electronics also signed an agreement to acquire Surrey, Canada-based Delta Controls Inc for C$220 million (US$175.7 million), it said. The transaction is expected to be completed before the end of this month.
Delta Electronics expects to begin booking revenues from Loytec Group this month and from Delta Control next month.
Although annual revenue contribution from the new investments is estimated to reach only about US$60 million, or 1 percent of Delta’s total annual revenue, the companies are financially healthy and profitable, Hai said.
Loytec Group and Delta Controls have operating margins of between 60 percent and 80 percent, and gross margins of about 20 percent, Delta Electronics said.
Delta Controls offers advanced technologies in controlling heat, ventilation and air conditioning (HVAC), while Loytec Group’s strength lies in its capability to integrate building management and control systems, Cheng said.
Their different expertises, client bases and distribution channels should help Delta Electronics expand its presence in the building automation market, he said.
These investments are just the beginning as Delta Electronics continues to seek merger and acquisition opportunities to secure its position in the field, he added.
The company yesterday also reported its first-quarter results, with net income reaching NT$3.88 billion, edging up 0.51 percent from a year earlier, but dropping 24.66 percent sequentially.
Earnings per share were NT$1.5 last quarter, compared with NT$1.59 a year ago and NT$1.99 in the prior quarter. Delta Electronics attributed the mild increase in net profit to increasing demand for power management, while the quarterly drop was due to seasonal factors.
The company expects revenue for this quarter to grow by a double-digit percentage from last quarter’s NT$47.6 billion, investor relations officer Rodney Liu (劉致遠) said.
Hai said Delta Electronics’ operations are likely to hit the peak next quarter, citing the company’s historical pattern.
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