HMS Networks has signed a binding agreement to buy Red Lion, a U.S.-based industrial automation solutions provider, for $345 million in cash, on a debt-free basis. Red Lion has a premium brand and a unique product portfolio. This acquisition will reinforce HMS’ presence in North America and boost cross-selling opportunities for both companies through their respective market channels.
In the last 12 months leading up to September 30, 2023, the combined sales of HMS and Red Lion exceeded SEK 4.4 billion, with an adjusted EBIT margin of approximately 24%. The acquisition is subject to customary regulatory approvals and closing conditions and is expected to close in the first half of 2024.
HMS Networks is delighted to welcome Red Lion into its family, as both companies are a perfect match in terms of products, geographic presence, and culture. Red Lion’s product portfolio is complementary to HMS’ offering and has little overlap. Red Lion also has a strong position in the North American market, while HMS has a core market in Europe, providing excellent cross-selling opportunities.
Red Lion’s “Access” products complement HMS’ Anybus and Ewon product lines, while Red Lion’s “Connect” offering adds a robust Ethernet Switch offer to HMS’ portfolio. Finally, Red Lion’s “Visualize” offering brings new opportunities for HMS to explore the Data Visualization offering, which is becoming increasingly important in the Industrial Automation environment. It has a central role and the ability to provide additional value on top of HMS’ connectivity and network offering. “We are eager to start working together and to realize the synergies between the companies and to enable each other to take the next steps on our common future journey once the transaction closes,” said Staffan Dahlström, CEO of HMS.
For HMS it is of strategic importance to strengthen its presence in the attractive North American market and to improve its product offering range with products and offers that are specifically developed to meet the North American market demand.
The acquisition of Red Lion is expected to create cross-selling opportunities for HMS by leveraging their different market channels. Red Lion’s sales are primarily in North America through a well-established distributor network, which will enable HMS to increase sales of its gateway and remote access products. On the other hand, HMS has a strong presence in the European automation markets with well-developed and targeted market channels, which will allow it to promote selected parts of Red Lion’s offering.
Furthermore, the acquisition is expected to have R&D and product development collaborations on several parts of both HMS’ and Red Lion’s offerings which will be explored further after the closing of the transaction.
Red Lion has four development sites, located in York, Pennsylvania, Mobile, Alabama, Dinkelsbühl, Germany, and Pune, India, and manufacturing sites located in York and Dinkelsbühl. Red Lion employs about 400 people globally, of which about 300 employees in the United States.
Closing of the acquisition is expected to take place during the first half year of 2024, subject to customary closing conditions, including filing with and approval by the appropriate authorities under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and filing with and approval by the Committee on Foreign Investment in the United States.
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