Tyco is still on buy trail - International Pages - Brief Article

Electronics Times, July 24, 2000

Diversified manufacturing conglomerate Tyco International's thirst for acquisitions seems to remain unquenched.

It promises to continue to add two companies a month, including to its electronics business, which is set to represent more than half of group revenue by the end of this year.

The news came as the electronics division grouped its global relay companies under the name Tyco Electronics Electromechanical Components, a move which sees a revival of the Schrack brand in Europe.

Michael Groom, UK sales and marketing manager, told Electronics Times: "At the moment, Tyco International is acquiring two companies per month. We are charged to do various acquisitions [internationally], but each MD around the world is personally in charge of buying local companies that will add value to that particular sector."

He says Tyco is negotiating with two relay companies with a view to buying them, and is looking to purchase a 30% stake in a third.

That paves the way for Schrack to become the number one UK relay company, says Groom. It is currently in third place, with UK sales of #26m, after Omron and Matsushita.

"The difference between the number one and the number three is just #5m [sales], so just one more acquisition and you are there. We will see a shake-up in the industry," he added.

Schrack had been part of Siemens EC since 1997, along with other relay firms Potter & Brumfield, OEG and lines from the UK's BLP. But Tyco bought these companies in October 1999, and has now decided to capitalise on the brand recognition of Schrack.

"There has been a confusion for two-and-a-half years where people do not know who we are and what we do. Once we became part of a huge company, we lost our identity," said Groom. "Schrack has been around a long time. We are relay people."

He says that, within Siemens, it had been hard to keep a focus on relays, which represented less than 1% of Siemens' worldwide sales.

Groom is confident about big business for Schrack: "My budget is for 50% growth this year. The [relay] market is growing - they are being designed into more and more applications every day - but the cost is going down.

"At the moment, the price is down. When prices are declining, growth comes through acquisitions."

In 1999, within Tyco International, electronics represented 35% of total group revenue of $22bn, to which healthcare, fire and security and flow control businesses also contributed.

But the acquisition of the Siemens businesses, for #651m, and others such as the OEM business of Thomas & Betts for $750m in May this year and the $2.9bn stock purchase of Raychem in May 1999, mean that group revenue for 2000 will almost certainly be based on a majority of electronics-based sales.