One of Victoria's oldest technology companies has been sold to an Australian firm for $25 million.
Daniels Electronics, a 62-year-old high-tech pioneer that designs and manufactures customized digital and analog radio repeater systems capable of working in extreme climates, has been acquired by Australia's Codan Ltd.
The deal is to be completed Aug. 17 and will see the company receive a $25-million payment with the possibility of about another $2 million if it hits certain earnings targets in the next 18 months.
Codan, based near Adelaide, South Australia, plans to raise the funds through a mix of borrowing selling of stocks. Last year, the publicly traded company reported earnings of $170 million AUS and a profit of $23 million.
According to Gerry Wight, Daniels' vice-president of sales and marketing, the company had been looking for the right buyer since brothers Ron and Terry Daniels talked of a transition a few years ago.
"At the start of this year, we went to the market to put Daniels up for sale," Wight said, noting they were looking for a buyer that would ensure Daniels continued to operate in Victoria and maintain the company's legacy while fostering growth internationally.
Wight said Daniels had likely reached its capacity to grow on its own and required the resources of a company like Codan to expand.
"What we liked about Codan is they had the size and reputation. They've been around for 50 years. They do kind of the same thing we do, though their technology and markets are different and culturally, they seem the same," said Wight.
Codan has only a small presence in North America while Daniels sells about 95 per cent of its wares here.
"There's no product conflict, no channel conflict and this is an opportunity to work with them to sell internationally and they fully intend to keep operations in Victoria," said Wight.
When the deal closes, Daniels will be a wholly owned subsidiary of Codan, retaining its brand and its 73 employees. Manufacturing, research and development will remain in Victoria. "And if we can grow international sales, which is the whole goal, we will do more manufacturing and more R&D in Victoria and that's great news," Wight said.
According to Dan Gunn, executive director of the Victoria Advanced Technology Council, while the threat of relocation always hangs in the air when a foreign company buys a local firm, there are plenty of recent examples of Victoriaborn companies continuing to grow after acquisition.
"Obviously, they become part of a larger entity and the strategic priorities of it," he said.
"But take Schneider [which bought Power Measurement] and Amazon [which bought Abebooks] - they are good examples of how companies have continued to grow and contribute to Victoria and remain part of the community and we hope the same thing of the Daniels acquisition."
According to a statement, Codan, which manufactures value-added electronic products for radio communications, metal detection and mining technology, targeted Daniels as a means to grow its market share and diversify its radio-communications product offering.
"The acquisition of Daniels begins a transition for Codan to a communications solutions provider. Daniels provided the opportunity to enter the [land mobile radio] market with a competitive and established product line," said Kevin Kane, president of Codan's Radio Communications Division.
The release suggested the transaction was a winwin, with Codan getting an established North American market while Daniels products will now be distributed more further afield, including in the emerging world.
"Daniels' value proposition of interoperability and low power consumption technology is ideal for emerging international markets," said Kane.
A privately held company, Daniels was incorporated in 1950 by Gordon Daniels in Prince Rupert. It was relocated to Victoria in the mid-1950s.
Ron and Terry Daniels, who stepped away from hands-on management of the company a few years ago, own the majority of shares in the company. with management and some employees owning about 15 per cent. Two years ago, its revenues were in excess of $20 million, with between eight and 12 per cent of that spent on research and development.
Of late, the firm had been looking for global partnerships that would offer new opportunities - the goal being to integrate Daniels radio equipment with others' equipment to build complete networked integrated systems.
When it started, Daniels manufactured marine radiotelephones and continued to improve upon its own designs until the fishing industry tanked in the 1980s. The company adapted and landed a contract to manufacture a made-to-order mountain-top radio repeater system for the provincial government.
It was a unique, one-off system but the company soon adapted it to suit a broader market and started to grow.
The systems and products have continued to evolve and the company's wares, employed heavily in the marine and heavy industrial sectors, are used by emergency-response teams around the world.