For a company that has been around for 25 years, power supply manufacturer Power-One was pretty quick to make its first acquisition.
The Camarillo maker of AC/DC power supplies for the high-end electronic equipment industry, has purchased the Uster, Switzerland-based Melcher Group, a maker of power supplies for the European market.
Power-One's purchase was to be completed this week, less than a year after the company issued its initial public offering and three years after the Stevens Group investment management firm purchased the company from its founder.
Executives of Power-One are excited about the move not only because it was the first of what they intend to be multiple purchases, but because the Melcher Group will give the Ventura County corporation entry into new international markets.
"This is a $15-billion or $16-billion world market," said Steven Goldman, president and chief executive of Power-One. "In this market there are only a couple of dozen high-quality jewels and Melcher is among the top."
As part of the transaction, Power-One agreed to pay Melcher $42 million and to cover the Swiss firm's $11-million debt.
Officials said the two companies will operate separately and will use both company names. Each operation manufactures about 700 different products, with Melcher largely targeting the European telecommunications market, areas in which Power-One has had a limited presence.
"Only 3% of our sales are in Europe; Melcher is 90%," Goldman said. "Melcher has 75 people in their sales organization in Europe in seven countries. The strategy is that Melcher is going to take over our marketing in Europe and we are going to take over the sale of Melcher products in the United States."
Goldman said he anticipates Power-One's European sales climbing immediately to 30% to 35% of the company's overall revenue, with further growth to come. He said future acquisitions likely will help to further establish the company's worldwide presence.
"Our stated strategy is to continue on an acquisition program--this is certainly not our last," he said, referring specifically to the potential of the Asian market. "We want to add companies to our portfolio that will expand our products and allow us to gain a geographical reach that we wouldn't have otherwise."
The Camarillo company reported net income of $3 million on revenues of $24 million for the first quarter of fiscal 1998, compared to net income of $1.1 million on sales of $22.6 million for the first quarter of fiscal 1997.
Power-One has about 1,700 employees and Melcher has about 350 employees. Goldman said he did not expect any loss of jobs.