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LIGHTING INDUSTRY
NORTH EUROPEAN M&A REPORT
IMAP CONSUMER PRODUCTS AND SERVICES 2017
CONTENTS
TABLE OF
CONTENTS
1
IMAP
transactions
v
Over 300 deals within Consumer Products and Services
26 transactions within Home Furnishings
For references visit
www.imap.com
3
A changing market
<
2
9
Major companies
Intro
>
13
17
M&A activity
Case studies
>
v
19
About
IMAP
<
IMAP CONSUMER PRODUCTS AND SERVICES
A CHANGING MARKET
LED is an interesting and
relatively new lighting
technology, which offers
great opportunities for
completely different
solutions than before.
LED is not a new invention most of us are used to LEDs
being red or green signal markets on your Hi-Fi or television set. These are so called
- low-power LEDs. During
the last couple of years “high
power” LEDs, i.e. LEDs operating at powers of around 1 W,
have reached a level of cost
and performance that make
them attractive to the general
lighting industry.
Market studies forecast that
in 2020, over 60 % of all new
and replacement light source
unit sales will be based on
LEDs2. Since LEDs are more
expensive than conventional
lighting, the value of the LED
sales will be even higher.
Global market
The global lighting market is
expected to have revenues of
over EUR 130 billion in 2020
with an expected 3 % annual
growth from 2016 to 20202.
The developed markets of
North America and Europe
account for approximately
45 % of the global lighting
market. The professional
segment is the largest with a
market share of nearly 40 %
of the global market.
Factors for growth
The market for lighting is
affected and impacted by
multiple factors, with three in
particular being the most important for development and
growth3. The first is the
macroeconomic situation, which influences new
constructions and there of
the number of new lighting
installations.
The second, energy efficiency
regulations and greater awareness, is redefining future
lighting product portfolios.
The third is government
action limiting certain energy
sources which will result in
additional demand for energy
efficient products, such as
LED.
Changing market
The lighting market is on a
clear transition path from
traditional lighting
technologies to LED and the
adoption of connected
lighting systems. These
trends, which reinforce one
another, are fundamentally
altering the underlying
economics and dynamics of
the market. Existing players
are scrambling to adapt while
new players – such as
manufacturers in Asia and
companies that market
private-label products – are
entering the fray.
Attractive new product
markets are emerging such
as the outdoor market. The
advantages conferred by
scale are withering in some
segments but growing in
others.
www.glamox.com.
Boston Consulting Group. How to win in a transforming lighting industry. (2015).
3
McKinsey&Company Lighting the way: Perspectives on the global lighting market. (2013).
1
2
IMAP CONSUMER PRODUCTS AND SERVICES
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As a result of the ongoing
trends, companies across the
complex lighting ecosystem
must evaluate where they
can compete effectively amid
the changes and adopt new
strategies to win in the future.
Regulations across the globe
have become more stringent,
fueling the penetration of
more energy-efficient light
sources which is expected to
boost the uptake of lowenergy light sources that will
help to close the looming
energy gap. LED prices have
eroded more aggressively,
pulling forward the pack time
of LED lighting.
Expected further growth
The general lighting sector
(including residential, office,
shop, hospitality, industrial,
outdoor and architectural
lighting) is the largest sector
in the global lighting market.
The general lighting sector
is expected to reach EUR
83 billion in 2020 and 80 %
share of the total market3.
The fast LED price erosion
has raised forecasts for LED
penetration in many of the
segments – office, shop for
example – while decreasing
the size of the lighting market
overall by value. Forecasts for
LED uptake in the residential
segment remain high and is
expected to reach over 70 %
in 2020.
Architectural lighting remains the early adopter
and it´s LED market share is expected to reach
close to 90 % by 20203. While LED lighting is
expected to penetrate faster due to greater LED
price erosion, the faster drop in the price of LED
lighting is likely to slow down overall growth in the
general lighting market. This adds to the
impact of slower GDP and construction
investment growth being forecast.
Important benefits of LED relative to ordinary
lighting sources are the long lifetime and the
possibility to maximize the energy saving effect
by optimizing the flow of light in a
fixture to adapt to the recommended light levels
for various lighting applications. This applies,
however, to choose the right products when the
lifetime of the LED does not automatically reach
50 000 hours4.
Unique features
LED technology has several unique and exciting
features. The lighting source is extremely small
which open up possibilities that have never been
explored. It allows a completely new design of
lighting fixtures.
Future of LED
Today, LED technology is well established in the
lighting field and a competitive alternative to
conventional solutions for most applications. In
the upcoming years the shift toward LED technology will continue to accelerate for one major
reasons. LED technology is still more expensive
than conventional lights, the price falling precipitously, owing to technological advances in
manufacturing and increasing LED efficiency.
The average price for a LED point is expected to
decrease from over six dollars in 2014 to less
than three dollars in 20202.
For example we can very precisely control the
light by using LED technique. It also allow us to
take control of the light, vary the light color and
the technology also behaves differently than the
conventional light sources.
4
Ljuskultur. LED för belysning inom och utomhus. (2013).
TRENDS
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-6-
TRENDS
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According to Philips (2016), one of the largest companies within the lighting industry, a significant trend in the lighting market is the technological transition from conventional lighting
technologies to LED lighting technologies. In addition, the general lighting market is currently
undergoing a rapid transformation, mainly driven by three underlying trends:
The increasing need for light;
The increasing demand for more efficient light; The increasing demand for digital lighting
IMAP CONSUMER PRODUCTS AND SERVICES
A GROWING SEGMENT
Total cost of ownership
There is an increasing focus
on the total cost of ownership
(TCO) of lighting. TCO
includes not only the initial
cost of lamps and
luminaries but also the
expense of replacing lamps
and cost of energy1.
As buyers pay greater attention to this measure and as
manufacturers market their
products by pushing the
message about LED´s lower
total costs, LED technology
will gain additional traction.
And as LED prices continue
to fall that TCO calculation
will become an even stronger
selling point.
In the professional segment,
the TCO is central to
purchase decisions and as
a result of that professional
customers have already
moved to more-efficient
conventional technologies
and are now shifting to LED.
This has ked to an almost
complete transition to LED
solutions approach for all
new installations. The GBA
(Global Lighting Association)
predicts that LED luminaires
will account for more than
95% of the luminaire market
in Europe in 20201.
Increasing the energy efficiency of LED armatures
reduces the use of electricity,
clearly benefiting the environment.
Smart Homes
The demand for smart home
products and lighting control
systems is still in its infancy
but the market is expected
to increase in the upcoming
years. The increasing popularity of LED gives momentum
to another significant shift to
the adoption of connecting
lighting systems. The
growing global energy
efficiency movement adds
to the importance of lighting
control systems in the
general lighting sector year
by year.
Regardless of the efficiency
of the light source, over 40 %
of lighting energy
consumption is still wasted
on average when spaces
and rooms are not in use1.
This means there is a strong
incentive to reduce energy
consumption via dynamic
lighting controls especially
where electrical usage is
high.
The shift to connecting
lighting will be most swift in
the professional segment
given that these professional
systems typically control a
large network of lights, the
savings based on TCO are
usually more significant.
Beyond saving energy,
lighting control systems have
several benefits when
combined with LEDs.
LEDs with a lighting control
system can increase the
lifetime, which improves the
investment economics even
further.
Growing value chain
These benefits of lighting
control systems are expected
to translate readily into new
business opportunities for
lighting companies. The
market for lighting system
control components is the
fastest growing value chain
element in general lighting
with an expected growth rate
of almost 20 % up to 20201.
Home systems with
connected lighting for the
consumer market generally
deliver less cost savings
for the end user than to the
professional segment due to
the smaller number of lights
in households and the lower
frequency with which lights
are used.
-8-
CONCLUSION AND SUMMARY
OLED - future?
Organic Lighting Emitting Diodes (OLED) can
create flat surfaces that emit a diffuse light by
electricity is sent through one or more layers of
extremely thin semiconductor materials. Today
there are no other suitable carrier material than
glass for the construction of the OLED, and it gives
limits of both thickness - about 2 mm - and mold
ability2. Scientists have already found
material that is thinner and more flexible, but it
requires a few years of research and development
to manufacture these OLED panels industrially.
IMAP's conclusion, in terms of LED and OLED is
that LED, long-term will be the solution for general
lighting applications and that OLED will probably
be usefull in niche areas, but not as a replacement
of LED solutions, but more as a parallel solution.
Conclusions
Companies in the lighting industry who want to
be successful in the next phase of mass
penetration of LED technology should make sure
they have a suitable strategy in place. They will
certainly have to adapt their internal processes
and systems to reflect the speed and flexibility
needed for LED market introductions.
They will also need to place a much larger
focus on continuous professional development,
education and keeping up to date with the latest
technological advances. Communication lines
will need to be slick and targeted to the right
audience at the right time.
Summary
The growth of LED will continue in the upcoming years until at least 2020.
LED systems are becoming “the standard” which leads to an increase in knowledge among
installers and suppliers.
The increase in popularity is mainly attributable to the continuing price decline of LED lighting.
Focus will be on TCO by customers in their decision making process where in addition to the purchase price, the cost of replacement and energy consumption are considered.
LED lighting is today most used in offices and public lighting but is growing rapidly in the
consumer market.
Connecting lighting systems “smart homes” and the outdoor segment of the lighting industry are
expected to grow fast in upcoming years.
Production and assembly of LED lighting products is expected to be brought back to Europe in the
future due to higher quality standards. Expectations are of a more favorable and financially
production climate and capacity in Europe, with a lack of import regulations and environmental
taxes.
1
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IMAP CONSUMER PRODUCTS AND SERVICES
Boston Consulting Group. How to win in a transforming Lighting Industry. (2015).
Ljuskultur. LED för belysning inom och utomhus. (2013).
TRENDS
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SELECTION OF MAJOR COMPANIES
Germany Belgium
Czech Republic Croatia
Sweden
Netherlands
MAJOR COMPANIES
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"LED prices are continuing to fall very quickly especially in general lighting. Some
products’ average selling prices (ASPs) were cut in half in 2015."
IHS, Lighting the Way – Trends for 2016
"The lighting industry operates in a relatively mature market, even if it is divided
between various types of companies with large local differences in terms of competition. A relatively high level of acquisitions is generally ongoing, in parallel
with shifting industry boundaries in the form of new participants, such as electronics companies, establishing themselves as the business opportunities with LED
technology become apparent.”
Fagerhult annual report 2015
"We are at the beginning of a lighting revolution! In September 2015, we achieved
our goal to convert our entire lighting range to LED – it is one of the ways we are
going all-in to tackle climate change. LED lights are the biggest thing to hit lighting since the electric light was invented!"
IKEA sustainability report 2015
IMAP CONSUMER PRODUCTS AND SERVICES
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IMAP CONSUMER PRODUCTS AND SERVICES
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M&A ACTIVITIES IN NORTHERN EUROPE
A trend of increasing number of transactions
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M&A ACTIVITIES IN NORTHERN EUROPE
Germany has been the largest market for closed acquisitions,
both from a sell- and buyside perspective
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16
14
GERMANY 37 %
SWEDEN 10 %
BELGIUM 10 %
DENMARK 10 %
NETHERLANDS 8 %
NORWAY 8 %
FINLAND 3 %
CHINA 2 %
CZECH REPUBLIC 2 %
FRANCE 2 %
SAUDI ARABIA 2 %
SOUTH AFRICA 2 %
TURKEY 2 %
UNITED KINGDOM 2 %
12
10
8
6
4
2
0
2010
2011
2012
2013
2014
2015
2016
Positive climate for acquisitions
The North European lighting industry is highly fragmented and made up of a few large companies
(global players), many 'mid-sized' ones, and thousands of Small and Medium-sized Enterprise. The lighting industry in Europe is a sector that is SME driven when it comes to the production of luminaires and
of high value products. This SME culture within the industry is the most crucial precondition to provide
the market with highly decorative, innovative, and sustainable products. The positive trends for
acqusitions is expected to continue during 2017.
Most active countries with transactions in
Northern Europe 2010-2016
20
19
18
16
10
8
6
4
2
0
Active purchasers in Northern Europe between 2010-2016
9
8
7
6
5
4
3
2
1
0
8
2
2
2
AB Fagerhult Nordeon GMBH Lagercrantz
Royal Philips
(Sweden)
(Germany) Group (Sweden)
N.V
(Netherlands)
Fagerhult
14
12
TRANSACTIONS
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10
7
4
4
4
3
3
2
2
The Swedish group Fagerhult is one of the Northern
Europe's largest producer of professional lighting
solutions for public environments such as offices,
schools, retail areas, industries and hospitals, indoor and
outdoor. The company recorded revenues of €400 mn in
2015. The company has been very acquisitive in recent
years and in 2016 bought WE-EF Group from Germany
and
Flux-Eclairage S.A.S from France.
Other recent acquisitions include: Lighting Innocations,
South Africa, Airlight, Turkey, I-Valo Oy, Finland,
Designplan Lighting Ltd, United Kingdom and LTS Lich &
IMAP CONSUMER PRODUCTS AND SERVICES
2
Wuensche
Group
(Germany)
RECENT DEALS
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RECENT DEALS
Target
Country
2016
Purchaser
&tradition A/S
Denmark
Anders Holch Povlsen
Denmark
Undisclosed
Aurora Group
Denmark
Deltaco AB
Sweden
Undisclosed
Nordesign AS
Norway
Lifco AB
Sweden
Undisclosed
Gavita AS
Norway
The Hawthorne Gardening Company
UK
Undisclosed
El-produkter AS
Norway
Lagercrantz Group
Sweden
Undisclosed
El-Björn AB
Sweden
Connecting Capital
Sweden
Undisclosed
I-Valo Oy
Finland
AB Fagerhult
Sweden
Undisclosed
WE-EF Group
Germany
AB Fagerhult
Sweden
Undisclosed
eldoLED Europe B.V.
Netherlands
Acuity Brands Lighting, Inc.
USA
Undisclosed
Flux-Eclairage S.A.S.
France
AB Fagerhult
Sweden
Undisclosed
Hoffmeister Leuchten GmbH
Germany
Alpina Capital Partners LLP
UK
Undisclosed
NXP Semiconductors N.V.
Netherlands
Silergy Corporation
USA
Undisclosed
Hess GmbH Licht + Form
Germany
NORDEON GmbH
Germany
Undisclosed
Ledvance GmbH
Germany
IDG Capital Partners
China
Undisclosed
ADB BVBA
Belgium
PAI Partner SAS
France
Undisclosed
GLP German Light Products Limited
Germany
Fujian Jiaipu Lighting Technology Co., Ltd. China
Undisclosed
LINKSrechts Ingenieurgesellschaft mbH
Germany
Glamox ASA
Norway
Undisclosed
LED Linear GmbH
Germany
AB Fagerhult
Sweden
Undisclosed
IQ SensorTech
Sweden
Sweden
Undisclosed
HELLA (street and industrial lighting)
Germany
Wuensche Gruppe
Germany
Undisclosed
Vanpee AB/AS
Norway / Sweden Lagercrantz Group
Sweden
Undisclosed
HELLA (airport lighting)
Germany
TKH Group NV
Netherlands
18
Martin Professional A/S
Denmark
HARMAN International Industries
USA
Undisclosed
WILA Lichttechnik GmbH
Germany
Nordeon Group
Netherlands
Undisclosed
NORDEON (Philips' assets in Springe) Germany
Varova BV
Netherlands
Undisclosed
SLV GmbH
Germany
Ardian
France
Undisclosed
Hellux GmbH
Germany
Zett Optics GmbH
Germany
Undisclosed
TE - Group NV
Belgium
Undisclosed Bidder
Belgium
Undisclosed
Cheyns NV
Belgium
Cebeo NV & Sonepar SA
Belgium
Undisclosed
OLIGO Lichttechnik GmbH
Germany
Uwe Braun GmbH
Germany
Undisclosed
Osram GmbH (spin-off 80.5% stake)
Germany
Siemens AG (Shareholders)
Germany
Undisclosed
La Grange NV Family
Belgium
Rexel SA
Belgium
Undisclosed
TopCom Europe NV
Belgium
Tristar Europe BV
Netherlands
Undisclosed
Country
Deal value M€
Target
2015
Riegens A/S
Denmark
SG Armaturen AS
Norway
Undisclosed
Zobra AB
Sweden
Aura Light International AB
Sweden
Undisclosed
Fergin Sverige AB
Sweden
Indutrade AB
Sweden
Undisclosed
Lighting Innovations
South Africa
AB Fagerhult
Sweden
Undisclosed
Lightyears A/S
Denmark
Fritz Hansen A/S
Denmark
Undisclosed
LUXeXcel Group B.V.
Netherlands
Patricipatiemaatschappij Vlaanderen NV
Netherlands
8
Zett Group (Zett Lite Lighting / Hellux)
Germany
Wuensche Group
Germany
Koninklijke Philips (assets in Aachen)
Germany
OLEDWorks LLC
Lotronic SA
Belgium
Re-Sources Capital
Louis Poulsen Lighting
Denmark
Elektroimportoren AS
Country
2013
Purchaser
Country
Deal value M€
2012
Aura Light
2011
El-Björn
Sweden
Priveq
Sweden
Undisclosed
Nordic Light Group AB
Sweden
ITAB
Sweden
Undisclosed
Designplan Lighting Ltd
UK
AB Fagerhult
Sweden
Undisclosed
Undisclosed
Lumoluce B.V
Netherlands
Nualight Limited
UK
11
USA
Undisclosed
Siteco Beleuchtungstechnik GmbH
Germany
Osram GmbH
Germany
Undisclosed
Belgium
Undisclosed
SLV GmbH
Germany
Cinven Partners LLP
UK
Undisclosed
Polaris Private Equity
Denmark
Undisclosed
LTS Lich & Leuchten GmbH
Germany
AB Fagerhult
Sweden
Undisclosed
Norway
Herkules Capital AS
Norway
Undisclosed
Ledil Oy
Finland
Ratos AB
Sweden
Undisclosed
NCW Holding Limited
China
Royal Philips N.V.
Netherlands
Undisclosed
Arlight
Turkey
AB Fagerhult
Sweden
Undisclosed
SEB Technology GmbH
Germany
Management
Germany
Undisclosed
LUXeXcel Group B.V.
Netherlands
Munich Venture Partners / Filsa B.V.
Germany
Undisclosed
General Lighting Company
Saudi Arabia
Royal Philips N.V
Netherlands
169
LemTec Innova GmbH & Co. KG
Germany
Ilan GmbH
Germany
Undisclosed
2014
IMAP CONSUMER PRODUCTS AND SERVICES
2010
TRANSACTIONS
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IMAP CASE: LEMTEC
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IMAP Germany advised ILAN Holding on the acquisition of the LED specialist LemTec.
Client Background & Objective
ILAN was founded in 2013 as an Investment Holding focused on the LED industry, mechanical
engineering, metal processing and renewable energies. The Holding typically makes investments in
well-established family owned and managed companies in West Germany that have further development
potential. The Holding is owned by two German entrepreneurial families.
The shareholders of ILAN were interested in finding a target in the LED industry that could enhance the
Holding’s strategic portfolio in this sector.
IMAP Advantage & Approach
As a leading and highly regarded advisor in the mid-sized market in Germany, IMAP was a natural partner
for ILAN. IMAP's proven track record in the region, both in number of deals and positive references inspired
confidence. In addition, IMAP displayed sector expertise due to previous transaction advisory in the
industry (for example the sale of OLIGO Lichttechnik to a German private investor in 2012) and
demonstrated the ability to act fast.
Michael Rieder, partner at IMAP in Germany, led the search and negotiation process for ILAN. IMAP
identified more than 30 companies within the industry as potential targets. The first contact with LemTec
was established in March 2014. The Company is a well-established LED specialist, focused on the
development and manufacturing of COB-LED-industrial lighting. The strategic fit between the Company
and the Holding’s management was evaluated during two pre-process meetings. IMAP's experience and
conceptual support was crucial for both parties in negotiating and finding the right transaction structure.
With IMAP's guidance, ILAN selected the most suitable target.
Outcome & Impact
IMAP succeeded in finding the most compatible target for ILAN’s criteria. With this completed acquisition
of a specialist in the field of industrial LED-Modules, the Holding could expand its portfolio in the lighting
industry in Western Germany. IMAP negotiated a deal that met the expectations of both parties and
completed the process from the initial contact with LemTec to the deal signing promptly in four months.
Having further strengthened its track record in the lighting industry, IMAP is expecting future opportunities
arising after the deal's closure.
IMAP CONSUMER PRODUCTS AND SERVICES
CASE STUDIES
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IMAP 2016 REVIEW
165 deals
US $4.8bn
disclosed deal value
US $38mn
avg. deal value
34%
cross-border
31 deals
PE involvement
- 20 -
IMAP GLOBAL
67
Global M&A activity slowed in 2016 compared to 2015, due
primarily to uncertainty stemming from political developments in
the US and Europe. A number of blockbuster deals partially offset
the slowdown. Cross-border interest from China and other Asian
buyers helped prop up deal volumes in North America and Europe.
While mid-market M&A also slid in 2016, signs of a rebound began
to show in Q4.
35
OFFICES
COUNTRIES
350
ADVISORS
ABOUT IMAP
- 19 -
In 2016 IMAP closed 165 M&A and financing deals worth over
US$4.8 billion in disclosed value. Average disclosed deal value
was US$38 million. Consistent with IMAP’s track record, crossborder
deals comprised 34 % of yearly transactions. 31 deals
in 2016 involved Private Equity. While industrials remained the
leading sector with 30% of transactions, IMAP continued to
leverage its sector expertise in closing deals across a wide variety
of industries.
One of IMAP’s largest public M&A deals was closed by IMAP
Colombia who advised the Colombian government on the sale
of energy generator ISAGEN to Canadian owned Brookfield
Renewable Energy Partners. In another notable transaction, IMAP
Germany advised hand tool specialist Wera on its sale to Bitburger
Holding.
IMAP continued to strengthen its international foothold in the last
12 months, welcoming new partners in several strategic locations:
Poland, India and Spain.
IMAP is a global merger and acquisition advisory organization with a presence in 35 countries. IMAP
closed over 2 100 transactions, valued at $90bn in the last 10 years and is consistently ranked among the
world´s Top M&A advisors (Thomson Reuters) for mid-market transactions. www.imap.com
Argentina | Belgium| Bosnia and Herzegovina| Brazil | Canada | Chile | Colombia | Croatia | Czech Republic |
Egypt | Finland | France | Germany | Hungary | India | Ireland | Italy | Ivory Coast | Japan | Mexico | Morocco |
Netherlands | Norway | Peru | Poland | Russia | Senegal | Serbia | Slovenia | Spain | Sweden | Turkey | United
Kingdom | United States
Retail
IMAP CONSUMER PRODUCTS AND SERVICES
Consumer
Products
& Services
Materials
Real Estate
Consumer
Staples
TMT
Industrials
Healthcare
Energy &
Power
Financials
IMAP BELGIUM
PHILIPPE CRANINX
PARTNER
WOUT HAESEBROUCK
CONSULTANT
DANNY ACHTEN
PARTNER
ANTHONY HERNAUT
CONSULTANT
KRIS VAN CAMP
PARTNER
VANESSA GOD
DIRECTOR
STEVEN LASAT
CONSULTANT
Argentina | Belgium| Bosnia and Herzegovina| Brazil | Canada | Chile | Colombia | Croatia | Czech Republic |
Egypt | Finland | France | Germany | Hungary | India | Ireland | Italy | Ivory Coast | Japan | Mexico | Morocco |
Netherlands | Norway | Peru | Poland | Russia | Senegal | Serbia | Slovenia | Spain | Sweden | Turkey | United
Kingdom | United States
IMAP CONSUMER PRODUCTS AND SERVICES
TEAM
- 21 -
IMAP BELGIUM +32 15 29 33 90 [email protected] www.imap.be
MECHELEN