Carmanah acquires LED driver company Lightech

Oct. 2, 2010
The acquisition of Israel-based LED driver manufacturer Lightech Electronic Industries Ltd. will allow Carmanah to offer driver components and systems to key lighting customers.
Carmanah Technologies Corporation (TSX:CMH), a manufacturer of solar LED lighting and power systems, has signed a definitive agreement to acquire all of the outstanding shares of Israel-based Lightech Electronic Industries Ltd, for an amount that could reach US$20 million.

Lightech manufactures power supplies for LED lighting, supplying major lighting OEMs and distributors. It operates R&D facilities in Israel and California, manufactures drivers and transformers through EMS contractors in China, and distributes these products worldwide through logistics centers in Hong Kong, California, Canada and the UK.

In a recent LEDs Magazine article, Lightech's Arye Schreiber and John Daly explained that well-designed LED drivers are no longer the weakest link in the LED lighting chain.

For the first six months ending June 30, 2010, Lightech’s unaudited International Financial Reporting Standards (IFRS) revenues were US$10.6 million, gross margin was 40.0% and net income was US$0.8 million.

Carmanah will pay an aggregate amount of US$18.5 million to Lightech's security holders, about one-third of which will be in Carmanah shares, which are traded on the Toronto Stock Exchange. The deal also provides payment of up to an additional US$1.5 million if certain revenue targets are achieved by Lightech in fiscal 2011. The deal is expected to close in November 2010.

Carmanah, which is based in Victoria, British Columbia, Canada, said that its strategic rationale for the acquisition is to:

  • Gain access to the large global transition to LED technology by acquiring a core component (electronic driver) supplier to lighting providers
  • Expand the company’s offering to include components and systems to key lighting providers and customers
  • Strengthen Carmanah's global presence, manufacturing, delivery, and routes to market, and
  • Generate operating and R&D efficiencies in both companies.

“With this merger, Carmanah makes an expansion into a complementary and synergistic business,” said Rob Cruickshank, Chairman of Carmanah. “Carmanah will be taking advantage of the vast lighting market’s current shift to LED, and applying the joint resources of Carmanah and Lightech to satisfy the urgent market need for LED lighting. In turn, the resulting technology developments at Lightech will ultimately advance the capabilities and applications of Carmanah’s outdoor area illumination product portfolio.”

“This is an important and exciting development for Lightech as it will not only allow Lightech to continue to build on its existing strengths but also provide our global customers with an established technology path to meet their future needs for state-of-the-art solutions,” said David Schreiber, chairman and CEO of Lightech.

“Carmanah has been preparing itself organizationally, operationally and strategically for acquisition for over a year in order to address the rapidly growing market for LED lighting products,” said Ted Lattimore, CEO of Carmanah. “We’ve been looking for a reputable, established route to market into the LED electronics supply industry, where our core technical competence in energy management could be applied to enhance product development, and where economies of scope and scale across the combined organization could be employed. We found the right opportunity in Lightech.”