Mergers, acquisitions solidify industry

Mark A. DeSorbo

BALTIMORE-News of mergers, acquisitions and now strategic partnerships is a good indication that the contamination control industry's fragmented days are numbered.

Industry professionals agree that growth is not just hinged on research and development. Efforts to strengthen market presence are equally essential, and collaborations offer the most direct route. [See “Partnerships change industry,” October 1999].

Kazemi: Veloz’s mission matched Servicor’s.
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Moreover, mergers and acquisitions are sometimes written into business plans as keys to survival. “You have to maintain a balance,” says Tom Veloz, chief executive of Veloz Holdings Inc. (Valencia, CA). “After the last downturn, the only survivors were the companies who had diversified.”

Veloz Holdings, a manufacturer of ultraviolet devices, recently acquired Servicor Inc., a San Carlos, CA-based cleanroom manufacturer. It is just one of many acquisitions that transpired within the first three months of the year 2000.

In fact, global mergers and acquisitions in all business sectors continue to break records, despite a slight downturn in Europe, according to Thomson Financial Security Data (Newark, NJ). The U.S. market drove the activity to a total of $1.16 trillion in the first quarter of 2000 with more than $583 billion in 2,500 transactions.

The two largest mergers the contamination control industry felt were deals between drug makers SmithKline Beecham PLA and Glaxo Wellcome PLC, and semiconductor makers Worldwide Semiconductor and Taiwan Semiconductor Manufacturing Co.

Mergers and acquisitions continue to happen across the board in the contamination control industry. Along with the acquisition of Servicor, vacuum cleaner manufacturer Nilfisk-Advance A/S acquired 70 percent of CFM (Zocca, Italy), another vacuum maker, while McLeod Russell Holdings PLC expanded its consumables arm by purchasing Vokes Filtration's air and liquid filtration business.

For Veloz Holdings, Servicor was its first cleanroom venture, having purchased the Clestra Clean APS625, an air purification system, and Air Purification Technologies Inc. (Valencia, CA), which specializes in air purification for infection control in hospital and healthcare settings.

“We thought (Servicor) would be a terrific way to expand. It was an acquisition that made sense,” Veloz says from the floor of CleanRooms East 2000, held here in March.

Reza Kazemi, vice president of sales and marketing, says Servicor's founder Richard Bona was looking to take the company to the next level. “Veloz's vision matched Mr. Bona's. Servicor was looking to grow, and we saw that in the commitment from Veloz Holdings,” he says.

The acquisition of Servicor, Kazemi explains, will yield a preventive maintenance, test, balance and certification services as well as cleanroom refurbishment. New products will also be introduced to meet the demands of life science industries, including technologies for aseptic processing.

“This acquisition allows us to enter other markets and get more of a customer base,” he adds.

That was also the thinking behind McLeod Russell's February purchase of the Vokes air and liquid filtration business, according to Tim Morel, managing director for Vokes filtration.

“The Vokes business is an excellent strategic fit with McLeod Russell's existing filtration operation,” he says. “This acquisition brings both businesses together and creates a major player in the European filtration market, offering customers access to an extensive choice of air and liquid filtration products and services.”

The Nilfisk-Advance and CFM merger was similar to the McLeod Russell-Vokes deal. “In this day and age, it pays to look at your competition,” Paul Miller, director of operations for Nilfisk-Advance America, Inc. (Malvern, PA), says at Interphex 2000, held in New York City in March.

It was at Interphex that Nilfisk was showcasing the fruits of an acquisition concluded at the end of last year. In mid-December, the Copenhagen-based manufacturer of vacuum cleaners acquired 70 percent of CFM, a vacuum manufacturer based in Zocca, Italy. CFM manufactures a line of modularly designed, three-phase and central vacuum systems. The company specializes in the assembly of 35 highly ergonomic machines that can be customized with 300 different options.

The result of the collaboration, Miller explains, is the CFM White Line series of single and three-phase powered industrial vacuum cleaners, which can be modified in numerous ways for specific processing and packaging applications within the pharmaceutical, chemical, food, and paper industries.

“We did not have this breadth in our product line,” Miller says. “This is the first time in 15 years we have taken such aggressive steps.”

Ole E. Jackobsen, Nilfisk's chief executive, says the CFM acquisition, along with the purchase of Euroclean and Kent in 1998, were major steps toward a larger worldwide presence. “The acquisition will provide access to the growing Italian market where Nilfisk-Advance does not have a strong position and the US market will gain access to a strong product line,” he adds. “In the long run, the acquisition will create more and very essential benefits for both companies and customers.”

At the time of this report, many companies, like Veloz Holdings, indicated that they would continue to seek other companies to acquire in order to establish a nationwide or even global presence.

“This industry really has no clear leader,” adds Kazemi. “It used to be a very fragmented industry with many small companies serving their own little markets. Now it's beginning to solidify.”

The result of the Nilfisk-Advance A/S acquisition of 70 percent of CFM (Zocca, Italy), a vacuum maker collaboration, is the CFM White Line series of single and three-phase powered industrial vacuum cleaners.
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