22 Jul 2024


HMS Networks buys Red Lion Controls to boost its US presence

Marcel van Helten, CEO of Red Lion Controls (left), with Staffan Dahlström, CEO of HMS Networks, after the signing ceremony

The Swedish industrial communications specialist HMS Networks is buying the US-based automation supplier Red Lion Controls from its UK owner, Spectris Group Holdings, for a cash sum of $345m, on a cash- and debt-free basis. The deal will strengthen HMS’ presence in North America and enable cross-selling of both HMS’ and Red Lion’s products.

In the year to September, 2023, HMS and Red Lion had combined sales worth more than $420m, with an adjusted EBIT margin of around 24%.

“We are very happy to welcome Red Lion into the HMS Networks family, the companies are a great match both when it comes to products, geographic presence, and cultural aspects,” says HMS CEO, Staffan Dahlström. “The combination of Red Lion’s product portfolio – which is complementary to HMS’ offering and has limited overlap – and the geographic match with Red Lion having a strong position in the attractive North American market, and HMS with its core markets in Europe, will generate good cross-selling opportunities.

“Red Lion’s Access products fit well with HMS’ Anybus and Ewon product lines, while Red Lion’s Connect offering adds what HMS has been searching for several years – a strong Ethernet switch offer with a strong market position,” he adds.

“Finally, Red Lion’s Visualize offering brings new opportunities for HMS to explore the data visualisation offering that is becoming more and more interesting with its central role in the industrial automation environment and its ability to provide additional value on top of HMS’ connectivity and network offering.”

HMS is planning to develop products and offers specifically to meet the demands of the North American market.

Currently, about 60% of HMS’ sales are to European automation markets in Europe, while most of Red Lion’s sales are in North America.

After the acquisition, about 45% of HMS’ sales are expected to be in Europe, about 39% in the Americas, and 16% in Asia.

Red Lion employs about 400 people globally, of which around 300 are in the US. It has two development sites in the US, and one each in Germany and India, with manufacturing sites in the US and Germany.

HMS employs more than 800 people and had sales worth $244m in 2022.

The acquisition, will is due to close during the first half of 2024 is expected to be accretive to HMS’ earnings per share from completion of the deal. One-off integration costs are estimated to be around S10m over two years.

The dispoasal of Red Lion brings Spectris’ proceeds from sales over the past five years to £1.2bn and completes a portfolio rationalisation that it drew up in 2019. Following the completion of the sale, its gas and moisture analysis specialist Servomex, which is currently reports alongside Red Lion, will report as part of Spectris’ Scientific division.

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