2016 saw plenty of M&A action in the home-technology sectors, including the categories of security, home automation, IoT, audio/video and networking.
This year we had more than the usual mergers and acquisitions in the professional home-technology channel, with SnapAV collecting three new brands, and Samsung picking up Harman, including AMX and a wealth of consumer and pro A/V brands.
As a reminder, here is our home-tech M&A roundup for 2015.
And now … a look at 2016.
Home-Technology Installer Channel
SnapAV, a dominant supplier to home-technology integrators, went on a spending spree in 2016, acquiring 1) Houselogix, a home-automation software developer that helped SnapAV build out its OvrC smart-home-as-a-service (SHaaS) platform; 2) Visualint, a video-analytics firm acquired to add value to SnapAVs surveillance solutions; and 3) Autonomic, a leading provider of media servers to the home-technology integrator channel.
This spree follows SnapAV’s 2015 acquisition of SunBrite TV, a leading provider of outdoor displays for residential and commercial applications.
Control4 – Pakedge
Control4 (Nasdaq: CTRL), a leading home-automation provider for the professional installation channel, acquired Pakedge, a top supplier of networking gear to the same channel. Control4 paid about $32.7 million for the company, which had 2015 revenues of about $18.5 million. For Q3 2016, Pakedge drove Control4 to record revenues of more than $55 million.
Legrand – Luxul
Just about the same time Control4 was buying Pakedge, Legrand snapped up Luxul, a top rival in the premium home-networking category with annual revenues of more than $20 million. Legrand is a leading provider of infrastructure products (OnQ, C2G, Middle Atlantic), home automation and lighting controls (Legrand, Vantage, WattStopper), motorized shading (QMotion, acquired in 2015), multiroom audio (NuVo Technologies) and other building-control solutions.
Terms of the deal were not disclosed.
In 2016, Legrand made a host of other acquisitions, including several lighting companies (below) and Jontek Ltd., a telehealth services company based in England. Jontek joins Tynetec in Legrand’s Assisted Living & Healthcare Business unit.
Nortek – Core Brands – Melrose
In a deal valued at $1.4 billion, Nortek (formerly Nasdaq: NTK) was acquired by UK-based Melrose Industries, Plc, which likes to “buy, improve, sell” manufacturing companies within two to three years.
With annual revenues of about $2.5 billion, Nortek owns several subsidiaries in the areas of home security, home automation, HVAC, audio/video, power management and other types of building controls, with vaunted brands such as Broan and Nutone).
The brands that serve the professional installer channels include 2Gig (security/mass-market home automation) and Core Brands, comprised of premium brands for custom installers – SpeakerCraft, Niles and Proficient (audio); Elan Home Systems and Xantech (automation and A/V distribution); Gefen (video distribution); Panamax/Furman (power management) and others.
After the merger, Core Brands president Joe Roberts declared “business as usual” for his group. Later in the year, Core Brands forged a tighter relationship with Nortek Security & Controls (2Gig, etc.) under the leadership of NSC president Mike O’Neal.
Before being acquired by Melrose, Nortek itself had acquired the speech-recognition company Nuiku. Nortek also acquired a 25-percent stake in MioS, a popular mass-market home automation provider with its own SHaaS platform.
In 2015, Nortek acquired Numera, maker of mobile PERS solutions for the aging-in-place market.
Alarm.com – Comcast – iControl
Alarm.com (Nasdaq: ALRM) and iControl are today’s undisputed leaders in the SHaaS business, with Alarm.com serving professional security dealers and home automation installers, while iControl serves mass-market providers like cable companies and telcos.
Alarm.com went public in 2015. In June of this year, Alarm.com and Comcast said they would acquire iControl, with Alarm.com getting the Z-Wave platform primarily used for ADT, and Comcast getting the ZigBee platform used by the service providers. Six months later, however, the deal has stalled, pending a lengthy FTC review.
Samsung – Harman – AMX
Samsung agreed to acquire Harman for about $8 billion, ostensibly for Harman’s connected-car business, including entertainment, controls and analytics. News of the acquisition said little about AMX, the home- and building-automation company that Harman acquired in 2014.
In 2015, Harman acquired Symphony Teleca and Red Bend Software for about $1 billion, adding some 8,000 engineers in the areas of cloud-centric software and wireless solutions.
The company had been around the block, starting with a bunch of independent reps who formed one umbrella organization, which was acquired by the giant IT/CE distributor Ingram Micro, which itself was acquired by Chinese conglomerate Tianjin Tianhai earlier this month, which divested AVAD right away to the private equity firm Kingswood Capital Management.
Late this year, AVAD announced new distribution strategies, including the shuttering of some branches and the opening of others as it moves to a more hub-and-spoke system.
B&W – Eva Automation
The acquisition of Bowers & Wilkin, an iconic loudspeaker brand, was a surprise to the pro-A/V channel and audiophiles alike. But the fact that it was acquired by a stealthy Silicon Valley start-up led by an owner of the San Francisco 49ers was rather shocking.
The new owner Gideon Yu launched a company called Eva Automation in 2014, developing wireless multiroom audio systems. Yu wanted acoustic expertise and a name brand to bolster the forthcoming solution. A casual conversation with B&W owner Joe Atkins eventually led to buyout.
The two companies have kept quiet since the May 2016 acquisition.
Somfy – MyFox – OpenWays
Somfy, the €1 billion+ maker of motorized window coverings, quietly built up a portfolio of DIY home-automation solutions this year, with the acquisition of MyFox and OpenWays/Okidokeys.
With annual revenues of roughly €8 million ($8.7 million), MyFox provides cloud-enabled security and surveillance systems. Somfy paid about €12 million ($13 million) for the business, which will launch at CES 2017 as Somfy Protect.
OpenWays provides a “mobile keys” platform for the hospitality industry, allowing guests to bypass the check-in counter and unlock their doors via smart phone. In 2013, the group entered the consumer market with Okidokeys. Somfy has re-branded the new access-controls unit as OpenDoors.
Kramer Electronics – iRule
Just as 2016 was closing, the giant commercial-A/V company Kramer Electronics acquired iRule, a popular developer of home-automation software for DIYs and Pros. The two companies have worked together since early 2015, when Kramer used iRule software as the basis of its first comprehensive control system called K-Touch.
While iRule was outwardly a consumer-technology developer, the company found its greatest success in commercial venues like sports bars and Best Buy’s Magnolia, where iRule’s flexible and robust software was selected to run A/V demos at the stores.
SCP – Current Audio
Structured Cable Products Inc. (SCP), a Ft. Lauderdale, Fla.-based manufacturer and supplier of low-voltage cables and accessories, has acquired Current Audio, a San Diego-based designer and manufacturer of in-ceiling speakers, in-wall speakers, outdoor speakers and accessories. Financial details of the transaction were not revealed.
Domotz – Fing
Fing is an app that discovers IP devices on the network – about 1.5 billion Internet of Things (IoT) devices last year through 6 million active users. Now the app developer has been acquired by London-based Domotz, a start-up that has big plans for the data. Think: home automation, remote network monitoring, cybersecurity, IoT troubleshooting and insurtech.
SurgeX – Ametek
ESP/SurgeX, a popular maker of intelligent power conditioning and protection products for the pro A/V and home-technology channels, was acquired by Ametek (NYSE: AME), a $4 billion (revenue) manufacturer of electronic instruments and electro-mechanical devices.
AVI-SPL, the largest commercial A/V integrator, announced it will be sold to H.I.G Capital, a global private equity firm that manages more than $19 billion in equity capital.
Apollo Global – ADT
ADT Corp. was acquired by private-equity firm Apollo Global Management LLC in a deal worth about $6.93 billion. Apollo plans to merge ADT with Protection 1 and ASG Security, both acquired by Apollo in 2015. All security groups will operate under the ADT brand.
Johnson Controls – Tyco
Johnson Controls, a global multi-industrial company, and Tyco, a global fire and security provider, announced plans in January to merge in a deal reportedly worth $20 billion. The merger was approved in August, creating an industrial conglomerate with $32 billion in annual revenue. The merger allows JCI to move its official base of operations to Ireland, potentially reducing its U.S. corporate taxes by roughly $150 million per year.
Honeywell – UTC/Interlogix – RSI – Xtralis
During the year Honeywell acquired Xtralis, a global smoke detection and video security company, and RSI Video Technologies, a leading provider of intrusion detection systems for commercial and residential security applications under the brand Videofied.
Honeywell went right to work with RSI, which it acquired for $123 million, launching a DIY version of the company's battery-powered motion-detector cameras. The new RSI Dragonfly Security System is a self-installed but professionally monitored security system, opening up new opportunities in recurring monthly revenue (RMR) for security dealers.
The acquisition of RSI came after a near-merger between Honeywell and United Technologies Corp., which owns the security and HVAC companies Interlogix, Kidde and Carrier. The mega-merger would have created a behemoth with $94 billion in annual sales. UTC, however, pulled out of the deal, citing “the strong regulatory obstacles, negative customer reaction and the potential for a protracted review process that would have destroyed shareholder value.”
Axis Communications – 2N
Axis Communications, a giant in the IP camera business, acquired 2N Telecommunications, a leading provider of IP-based intercom solutions. Terms of the deal were not disclosed.
In April, Vivint Smart Home, a leading installer and product developer in security and home automation, secured a $100 funding round led by Peter Thiel and the strategic investment firm Solamere Capital.
LeEco – Vizio
Chinese consumer-technology giant LeEco acquired the TV giant Vizio for about $2 billion. LeEco says it wants to take on Apple, Google, Tesla, Amazon and Samsung in the TV, smartphone, VR, streaming media and self-driving car businesses.
Tessera – DTS
In September, Tessera (Nasdaq: TSRA), a licensor of technology and intellectual property, acquired DTS, a leader in surround-sound technology, for $850 million. DTS itself does not make audio products, but its technologies are implemented in numerous devices including headphones and surround-sound processors.
DTS technology includes audio codecs (DTS-HD, DTS:X), audio processors (DTS Headphone:X, DTS Sound), wireless audio (DTS Play-Fi) wireless audio, and digital radio (HD Radio).
“The acquisition will make Tessera one of the leading product and technology licensing companies globally,” according to a Zacks analyst. “Tessera expects the combined company to generate pro forma revenues of around $450 million in 2016, half of which will come from product licensing.”
The DTS assets will be added to Tessera's growing portfolio of licensable technologies, which includes FotoNation (computer vision, video analytics) and Invensas (semiconductor packaging, interconnect solutions).
Teserra plans to introduce a new name and ticker symbol in 2017.
Razer – THX
One month after the DTS acquisition, rival THX was acquired by Razer, maker of headphones and other hardware and software solutions for gamers.
An iconic surround-sound brand, THX (like DTS) does not make its own products; rather, the company provides specifications and certifications to “set the highest standards for home theater audio and video equipment.”
Following the Razer acquisition, THX plans to expand its current audio- and video-certification programs to include new technologies such as immersive audio, HDR, augmented reality, virtual reality and headphones.
“This acquisition will allow us to reinforce Razer’s leadership in gaming and extend the brand into broader areas of entertainment, while at the same time empowering THX to develop into a global powerhouse, independently,” said Razer CEO CEO Min-Liang Tan.
Rovi – TiVo
Rovi, a leader in interactive programming guides and analytics for TV viewing, acquired TiVo for $1.1 billion.
Viacom – Roku
In February, media conglomerate Viacom made a minority investment in Roku, the streaming-media and platform company. The Viacom investment was part of a $45 million funding round.
Networking & IoT
Brocade – Ruckus – Broadcom
Brocade Communications, a giant provider of software for enterprise networking, acquired Ruckus Wireless, a leading provider of networking hardware, for $1.2 billion in May 2016. Later this year, however, Broadcom announced it would acquire Brocade for $5.9 billion and divest Ruckus. Broadcom, which makes silicon for wireless devices, was itself acquired in 2015 for $37 billion — the biggest technology acquisition ever — by Singapore-based Avago, another wireless silicon provider.
Nokia – Withings
Communications giant Nokia acquired Withings, developer of IoT health solutions, for roughly $191 million. Nokia Technologies, the company's newish technology and licensing business, established a new Digital Health business unit in the process.
Withings' product portfolio includes activity trackers, smart body analyzer scales, thermometers, blood pressure monitors, home and baby monitors and more, and a “sophisticated digital health platform.”
Qorvo – GreenPeak Technologies
In April, Qorvo, RF solutions for mobile, infrastructure and defense applications, said it would acquire GreenPeak Technologies, provider of low-power, short-range RF communications technology — in particular ZigBee-based solutions.
According to the press release, “The acquisition of Netherlands-based GreenPeak will allow Qorvo to expand its customer offering to include highly integrated RF solutions and systems-on-a-chip (SoCs) for the connected home and the rapidly growing Internet of Things (IoT).”
GreenWave – Predixion
In September, IoT platform provider Greenwave Systems acquired Predixion Software, proprietor of the RIOT edge-analytics engine. The acquisition allows Greenwave to enable real-time analytics through its own AXON IoT platform, deployed in 8 million households and 4 million mobile devices. Greenwave powers Verizon's home automation-capable Quantum routers, as well as energy-management services from E.ON, the big European utility provider.
ARM – Apical
Chip designer ARM recently said it had paid $350 million in cash to purchase Apical, which manufactures technology for analyzing images. London-based Apical, which specializes in embedded computer vision, will help ARM accelerate its expansion into new IoT-related markets, including connected devices.
Before Softbank gobbled-up ARM, the chip designer made a telling deal of its own, paying $350 million in cash to purchase Apical, a firm which manufactures technology for analyzing images.