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Fort Wayne, Indiana-based WaterFurnace Renewable Energy Inc. and Swedish manufacturer NIBE Industrier AB announced on June 23 that NIBE will acquire WaterFurnace in a $352 million transaction to be finalized in August, pending the outcome of an official vote by WaterFurnace shareholders.
WaterFurnace will keep its name and continue to operate as a separate entity under current CEO Tom Huntington, who said he was confident shareholders will approve the deal.
“The combined talents of these two fine companies are aimed at helping people around the globe find sustainable energy solutions,” Huntington said. “As CEO of WaterFurnace, and on behalf of my whole team, we are excited to be joining one of the market leaders in our industry.”
Positioned to Lead
The acquisition by NIBE, a manufacturer of heat pumps in Europe with 2013 net sales of $1.5 billion, will help position the company as a leader in geothermal in North America and Europe, said Gerteric Lindquist, CEO, NIBE. “We are creating a global leader in sustainable energy solutions. We are a definite leader in Europe, and now … we are together, really forming a formidable body when it comes to renewable energy and saving energy, and also being sustainable. … This acquisition is very well timed as far as our vision and growth targets.”
Huntington said he believes the transaction will help the WaterFurnace brand, which will form part of NIBE Energy Systems, grow its market share in the U.S. and overseas.
“What’s at the heart of this partnership between our companies is the fact that 87 percent of our sales are currently in the U.S., 10 percent in Canada, and only 3 percent internationally,” Huntington said. “We firmly believe that our products … can find a wonderful application in the U.K. and throughout Europe.”
Huntington added that the company is looking to expand its commercial offerings in Europe, where NIBE is already a leader in the residential geothermal market.
“WaterFurnace’s commercial products and technologies are a great complement to NIBE’s residential offering,” he said. “As we look to the future, commercial products for Europe can be sourced from our Fort Wayne facility, the China JV [joint venture], or our wholly owned business, Hyper Engineering, in Wollongong, Australia.”
A Perfect Partnership
Before announcing the purchase, WaterFurnace had been courted by other potential buyers for several months.
“Last year, a large merger in the geothermal industry motivated a number of companies to express an interest in partnering with WaterFurnace,” Huntington said. “Initially, two brands approached us, but eventually grew to a significant number of parties. This amount of attention really illustrates a growing acceptance that geothermal heat pumps are an important part of our energy future going forward.”
Huntington said NIBE, which first approached WaterFurnace earlier this year, emerged as the best fit for the company largely due to its similar aspirations, goals, and employee-centric company values.
“After some research and interaction with each company, it became clear that NIBE had the best fit, along with the most compelling offer,” Huntington said. “In fact, during our discussions, NIBE wanted to make very sure that the management team and employees would stay intact — both before and after the transition. Their focus on employees and culture reflects our own and is another reason we’re glad to have NIBE as a partner.”
“[Waterfurnace] is still run in a very family oriented way … with a lot of heart and a lot of soul, which is very important when we’re stepping in,” Lindquist said, adding, “We are looking forward to wonderful endeavors together.”
Huntington acknowledged the acquisition will significantly boost WaterFurnace’s ability to compete in the geothermal market. “This is really an example where one plus one equals three, and the final result is greater than the sum of its parts,” he said.
“NIBE brings with it increased resources, cost-efficiencies, and a scale that we lacked on our own. Meanwhile, we offer tremendous brand equity in a strong, growing business that will serve as a foundation for NIBE to expand into North America. WaterFurnace’s Fort Wayne facility will become the new headquarters for NIBE’s Energy Systems business in North America.”
Since WaterFurnace is headquartered in Indiana and listed on the Toronto Stock Exchange, the transaction will be subject to the approval of the Ontario Superior Court of Justice, the receipt of the required approvals under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, the receipt of all other necessary regulatory and third-party approvals, and other customary conditions.
Throughout this process, however, it will be “business as usual” at WaterFurnace, which is not planning any layoffs or restructuring as a result of the purchase, Huntington said. In fact, WaterFurnace plans to continue growing the company and expanding its product offering.
“Thanks to a rebounding economy and strong sales, WaterFurnace was hiring before the acquisition and will continue to do so throughout the merger,” he said. “WaterFurnace will be much more aggressive about growth, thanks to the backing and resources of a large multinational corporation.”
Commercially, WaterFurnace will continue to focus on increasing its market share, with help from NIBE’s portfolio of technologies, and will pursue new opportunities, primarily in commercial replacement applications, Huntington said. “Residentially, variable-capacity heat pumps, advanced zoning systems, home energy management, and integration into net zero buildings remain our long-term ‘four corners’ strategy,” he added.
Meanwhile, WaterFurnace’s 267-plus employees have been kept apprised of the transition and have been encouraged to communicate with leadership about any questions or concerns they may have.
“Our employees realize this represents a tremendous opportunity for WaterFurnace,” Huntington said. “Our employees are our greatest asset, and we’re working very hard to make sure they’re in the loop and are at ease with this change. We want them to feel empowered and to know that the future is very bright for WaterFurnace.”
Lindquist agreed that the future of both WaterFurnace and NIBE appears prosperous.
“WaterFurnace was almost a bit more profitable than ourselves, and now that we’re in the same house, we don’t mind that at all,” he said. “It’s a very nice marriage.”
Publication date: 7/7/2014