IT'S LONG been known in the industry that key members of the Guzzini family – owners of top Italian architectural lighting brand iGuzzini – wanted to either partially or completely cash out and the preferred route for several years was an Initial Public Offering.
However, shifting dates for the IPO put the appetite of shareholders and senior managers (often one and the same) for this option in doubt.
Certainly, not many will have relished the cultural change inherent in the move from a company accountable to a family steeped in the lighting industry to one directly accountable to numbers-focused investors.
The private equity option, currently fuelling much of the consolidation activity in the lighting sector, was also dismissed.
Instead, yesterday’s agreement to bring iGuzzini into the Fagerhult fold appears to give iGuzzini’s owners the best of both worlds: the (partial) cash sale it wanted but the stewardship, skills and synergies of a very substantial lighting enterprise with similar values.
Compared to private equity suits, the group will be seen as farmers not hunters
Although the Fagerhult Group is a public company listed on the Stockholm Stock Exchange, almost half its shares are owned by Investment AB Latour, the vehicle for Swedish billionaire and politician Count Gustaf Douglas.
When combined with the holding of the family of Fagerhult founder Bertil Svensson, Investment AB Latour has effective control of the group.
The latter has made no secret of its ambitions to be a major lighting player in Europe and beyond and its 10 acquisitions in the last decade attest to that.
Compared to the march of the private equity suits across the landscape in recent years, the group – albeit public – will be seen by industry observers as more of a farmer than a hunter.
The union of Fagerhult and its associated brands with iGuzzini, arguably the most admired (and certainly one of the most copied) brands in the industry, will create a new European supergroup with annual sales of £640 million (€730 million, USD$845 million).
iGuzzini’s strengths are legion; it has an accomplished optics team who have helped create some hugely impressive innovations in recent years, not least the Laser Blade, the Dean Skira-designed Trick and the Laser family of downlights.
It’s the only major company with the confidence to take its customers through a ‘black box’ booth at the massive Light + Building exhibition to show off its optical precision.
It combines Italian style with top-flight engineering, and not least, the marketing team are among the best in the industry.
Fagerhult’s history of giving its brands a lot of autonomy was undoubtedly a reassuring factor for iGuzzini shareholders in giving their blessing to the deal. That’s not to say there isn’t a group-wide strategy; there unquestionably is, even if it’s not written down.
With the European lighting market facing a host of challenges, not least unprecedented price pressure, the case for consolidation is overwhelming.
Well-managed unions of brands can unleash significant synergies, not least increased buying power, opportunities to share services and manufacturing facilities, opportunities to sell across brands and, not least, the increased power of bigger financial muscle.
The key to success appears to be the sharing of brand values and routes to market. Mergers of luminaire makers with a wholesaler route to market with those who favour the specification route don’t have an illustrious history in this business.
But on the face of it, that’s not the case in the combination of iGuzzini and Fagerhult. Their strengths in terms of product range, geographical footprint and innovation appear complementary.
Should the sale go ahead in December as expected, we could be witnessing the birth of a true industry supergroup.
- Ray Molony will chair the Safer Cities conference on Wednesday 14 November 2018 at the LuxLive 2018 exhibition. The show itself takes place on Wednesday 14 November and Thursday 15 November 2018 at ExCeL London. Entry is free – view the full programme HERE.