StockerYale to buy UK firm
StockerYale Inc. will be “doubling the size of the company” by buying British laser company Photonic Products Ltd. for $9.4 million, said StockerYale president Mark Blodgett.
The Salem-based provider of photonic-based products will be adding an 11-year-old privately owned company located in Hertfordshire, England, with annual sales of $9.5 million. Photonic Products, which employs 45, mainly distributes lasers diodes and optical lenses from companies such as Sony and Panasonic, but in the last five years has started manufacturing custom-designed electro-optical sub-assemblies based on semiconductor laser diode technology for manufacturers.
The sale will create a “lot of synergy” said Blodgett, because Photonic mainly serves the low end of the market with plastic lenses, producing such products as medical devices that treat things lack acne and checkout scanners, whereas StockerYale focuses on the higher end – including the military – with glass lenses. The top 25 customers from each company don’t overlap, Blodgett said.
In addition, Phontonic manufactures much of its own components, and StockerYale purchases them. And Photonic invests most of its money in manufacturing efficiencies, whereas StockerYale invests in R&D. Photonics also has thus far produced better margins and “has been profitable from day one” and “virtually has no debt.” StockerYale has been losing money and is heavily in debt.
StockerYale said it would lay out $4.25 million, obtaining most of the cash through a recent refinancing from its primary lender. Photonic Products will finance the rest of the sale with $2.75 million in shares and $2.4 million in bonds.
The purchase should pay off immediately, Blodgett said, and StockerYale is already eyeing other companies.
“The market is ripe for consolidations, and we could be a consolidator in this space,” said Blodgett. “We are looking for other acquisitions in the fiber and photonic field.”
The market’s reaction was positive, although slightly. Stocker Yale’s stock priced closed at $1.05 Wednesday, a 3-cent gain. – BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW
