Managing merger
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Posted Date: 01/03/2008
Issue: Airside International March 2008
Publication: Airside International
AI: We understand that the rationale for the decision to merge was to improve safety and efficiency on the airfield by making the lights intelligent. What does the combined portfolio of SAFEGATE and THORN AFL airport products bring to the table to allow the combined entity to offer more intelligent systems?
P-OH: It is true that the driver for this merger is our will to bring more safety and efficiency to airfield operations. The idea is to propose complete solutions for the Advanced Surface Movement Guidance Control System; in other words, we want to make lighting intelligent and dynamic. By combining the R&D resources of both SAFEGATE and THORN AFL, we have been able to develop a revolutionary concept: the SafeLED IQ, the first LED intelligent light. This is the merger of the CMS communication module and the LED power converter inside the light fitting itself. It looks pretty simple, which is the sign of a good idea, but it is not easy to do. That is where the combined knowledge of the two companies has played a big role. The main advantage for the customers is a simplification of the system. One intelligent light replaces a standard light + a communication module + a link between the light and the module + a link between the module and the power cable. The installation, the setting and the maintenance are much simpler. So this will contribute significantly to the development of this kind of system.
AI: What does SAFEGATE bring to the THORN AFL products to make the airfield lighting business "future proof"? That is, how is SAFEGATE ensuring that THORN AFL's products fit the future demands of the airport community?
P-OH: Unlike the THORN lighting group, to which THORN AFL formerly belonged, the SAFEGATE group is 100% focussed on the airfield business and has been a pioneer in airfield lighting control systems and visual docking guidance systems. The merger is clearly a step towards future lighting solutions with more added value for the customers. The new group is perfectly sized and organised to meet the challenges that the industry will have to face, like environment issues.
AI: How does SAFEGATE and THORN AFL, as a combined entity, look after the environment in an improved manner than previously?
P-OH: By making the lighting intelligent, there are many possibilities for decreasing the power consumption of the light itself. For instance, this can be achieved through dynamic management of the lighting. We automatically switch on the taxiway lights in front of an aircraft (“follow the green light”) to guide it from the runway to its parking stand and automatically switch off the lights when the aircraft has passed them. This saves a lot of electrical power. But even more importantly, this intelligent and dynamic guidance saves a lot of fuel because it speeds up the aircraft routing: no queue, no waiting time, no misunderstanding and no wrong way. That’s what we call efficiency. Nottingham University reports that up to 25% of pollution from aircraft waiting at the holding area can be reduced.
AI: What have been your combined successes during 2007 that might not have been otherwise achievable?
P-OH: The new group has been awarded a major turnkey contract with Melbourne Tullamarine International Airport that includes addressable lights. For sure, the combination of the companies played a big role in this success as the project integrates products from the old THORN AFL and the old SAFEGATE entities. We have been able to achieve a perfect understanding of the complete requirements and then offer the right package of products and services.
AI: Has the merger made any difference to your international reach or was this never in question anyway?
P-OH: Both THORN AFL and SAFEGATE group were very international as the airport industry is a worldwide market. Of course, as European groups, we are both very present in European airports; and we both have strong bases that perfectly complement each other. THORN AFL is very strong in the Middle East (the last big contract awarded was Jebel Ali Airport in the UAE), which is a key market for airport growth. SAFEGATE recently achieved major successes in the US (Dallas) and in China (Beijing).
AI: There is much cynicism about the success of M&As in terms of their ability to integrate, deliver shareholder value and provide clarity to the customer. Why is this M&A any different?
P-OH: THORN lighting was founded in 1928, and the Airfield Lighting division in 1953. That is a long history in common. So why this spin-off? This is because the airfield lighting activity has now much more synergies with airfield control systems than with general lighting. THORN AFL was a small division (less than 3% of the ZUMTOBEL/THORN lighting group turnover) with needs that were becoming increasingly different. Indeed, the airfield market is changing: from fragmented, rather conservative and very product oriented to high-tech, high added value and fast evolving. Our customers, who deal with complex issues, want to work with a limited number of partners providing them complete and efficient solutions simple to implement and to maintain.
AI: Do year end or interim results reveal anything about your achievements?
P-OH: 2007 has been a very good year in terms of revenue and profitability, as were 2006 and 2005. Our market – structurally – is growing by 4-5% per year: more air-passengers, more air freight and also more safety, more efficiency and now more environmental care. It is too early to see the impact of the merger in our turnover figures, but we see it in our order book, that means that we will see it in our sales for the next two to three years. We have an ambitious sales development plan.
AI: Was THORN AFL simply a perfect fit for SAFEGATE group or are you considering further acquisition targets?
P-OH: There will probably be further acquisitions. BUT, any acquisition has to make sense and to fit into our vision built around three pillars: safety, efficiency and environment.
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