The lighting industry has witnessed several important mergers over the last year, with a rush of activity this spring and summer, causing one to wonder if larger economic forces are afoot.

Square D, a subsidiary of Schneider Electric, an international corporation headquartered in France, started things off last summer, when it purchased U.S.-based Juno Lighting. At the time, Juno had reported revenues of $242 million. The deal, according to Schneider, helped it expand its presence in the U.S. market. More recently, Philips acquired Bodine, a Tennessee-based manufacturer of emergency ballasts with revenues over $30 million in 2005. The lamp and electronics manufacturer saw an opportunity, with its purchase of Bodine, to 'enter strategic new market segments involving building networks,' said a July 7, 2006, press release.

A merger between Quality Home Brands and Encompass Lighting Group, completed in June 2006, assembles the 'broadest, deepest, and strongest offering of aesthetically superior lighting for residential and commercial applications,' commented Tracy Bilbrough, president and CEO of the newly combined company Generation Brands, in a press release dated June 20, 2006. (Interestingly, Bilbrough was president and CEO of Juno when the company was acquired by Square D.) Quality Home Brands was, itself, founded only last fall, with the merger of Murray Feiss Lighting, Monte Carlo Fan Company, Sea Gull Lighting, Light Process Company, and Royce Lighting.

In recent months, Genlyte acquired both JJI Lighting Group (May 2006) and the U.S.- and Hong Kong-based operations of Strand Lighting (July 2006). The former, which has 15 branded business units, including two in Europe, is one of the largest privately held fixture manufacturers in the United States with 2005 sales of $130 million. In addition to giving Genlyte certain operational synergies and access to several highly specific market niches, the JJI acquisition, notes Genlyte CFO Bill Ferko, has also provided the company with a factory in Germany, its first in Europe. Strand, which is being broken up as part of a restructure, recorded sales of $31 million for the business units that are currently part of the deal. An international theatrical lighting business, Strand has 'static light fixtures, which we did not have in our product portfolio, and a robust dimming business,' says Ferko.

The lighting industry is not new to M&A activity. 'There has been a consolidation going on for about 15 years,' says Ferko. 'If you go back to the early 1990s, the largest thirteen companies had about a 34 percent market share. Today, in North America, the largest four lighting manufacturers have a 62 percent market share.' In Ferko's opinion, the confluence of a slowing residential construction market and a simultaneous pick-up in the commercial and industrial sectors has encouraged acquisition momentum. 'The changing economic environment causes people to think about how to operate within that environment,' he says. The pace of consolidation has slowed since its peak in the late 1990s, notes Craig DiLouie, principal of Zing Communications. 'However, the scale of some recent acquisitions is notable, such as Square D's of Juno and Genlyte's of JJI. Looking forward, acquisitions are likely to continue to be very selective.' A|L