Barco Acquisition of projectiondesign Bodes Well for Both Companies

By David Keene On December 20, 2012

This week’s news that Belgium-based Barco has acquired a 61% stake in Norway-based projectiondesign is an interesting twist to the video projection market as we head into 2013.

I’ve been following both companies for years. I’ve been to both the Barco HQ in Kortrijk, Belgium, and projectiondesign in Fredrikstad, Norway, for up-close looks at their dynamics, and both companies are at the top of the market in terms of product evolution and innovation. Neither of these companies plays in the mass-sales, low (sometimes-no) margin world of shipping out hair dryers (as some in the industry affectionately call all those millions of low-lumen, cookie-cutter projectors churned out daily to service the low price point classroom and “portable projector” market). Both companies are known for highly engineered, latest generation projectors that are at the top range of their market niches. Barco is a strong player in the high-lumen video projector market including the staging market, and the Cinema market. Barco is of course one of the three official DLP Cinema partners of Texas Instruments and they’ve been selling DLP Cinema projectors at a brisk pace the past few years as that market moved from slow to a booming market in the run-up to the complete digital transition of commercial movie theaters worldwide– the sales there in 2011-2012 alone are huge. (Heard of the new Hobbit movie being shown in 48fps, that just opened in theaters? A lot of the projectors showing the movie in 48fps are Barco DLP Cinema projectors.)

projectiondesign has been making the Porsches of video projection ever since they came out of the gate in 2005 with the first 1-chip DLP 1080P projector. They’ve pushed the envelope on that technology, showing that it’s possible to get great results with a color wheel and a customized simple DLP light engine.

And both Barco and projectiondesign are top players in an important market– the simulation market. Barco’s strength is in military sector, for simulation, though it is very active in the “commercial” part of the simulation market. projectiondesign is on the other hand stronger in commercial simulation applications such as commercial flight simulators. With this acquisition, Barco hopes to cross-pollinate those two parts of the simulation market.

Will projectiondesign products continue to be branded as such, or will they be branded as Barco projectors? According to Carl Vanden Bussche, Director Investor Relations at Barco, “In a first phase projectiondesign will continue to operate as a separate entity in the Barco group. But we have started a joint integration team, with the two companies. So mid-to-long term, we’ll see how that integration plan evolves.”

Jørn Eriksen, the CEO of projectiondesign, will continue in that post, and Eriksen told me today that he’s excited and “very happy about the deal, which gives us critical mass and motion to grow in the right direction for the future.”

All projector manufacturers are now keen on growing their Asian and Latin American market penetration, and Barco is strong in both regions. They now hope to leverage that to offer more products to more customers.

Keep in mind that this was not a total acquisition of projectiondesign by Barco. Barco acquired 61% of projection design from Herkules. Who owns the other 39%? Those shares are mainly held by existing projectiondesign management– no different than when management held those shares while the other 61% was held by the VC company Herkules.

One interesting issue: to date, projectiondesign has been an OEM supplier to Christie Digital. Christie buys some projector models from projectiondesign, and re-brands them as Christie products. Will this now cease? Barco is not saying at this point. But if this relationship would continue, well, much stranger things have happened in acquisitions. Note that when Barco acquired High End Systems a few years back, HES at the time of the acquisition was sourcing video projectors from Sanyo to put in their DL series lighting yoke/video projector hybrids. And that continued for a long time after the acquisition.

This is the Press Release from Herkules:


Herkules sells its majority share in Projectiondesign to Barco

(Oslo, 19 December 2012) Herkules Private Equity III has sold Projection Holding to Barco, the global visualization solutions provider. Projection Holding owns 61% of the shares in Projectiondesign, a leading developer and manufacturer of high quality projectors for professional applications. During the Herkules ownership period the company has strengthened and secured its strategic market positions in important global verticals.

Projectiondesign develops, designs, manufactures and sells high performance projectors for a wide range of applications including simulation, visualization, control rooms, visitor attractions and collaboration rooms. The company, based in Fredrikstad, Norway, has a strong team of engineers with significant experience and competence within electronic, optical and mechanical technology, as well as distinct capabilities within system design of high performance projectors. From the historically low revenues in 2010 of NOK 317 million revenues increased to NOK 427 million in 2011, with continued growth in 2012. In addition to securing Projectiondesign's technological leadership in a challenging macroeconomic environment, a large sales and partnership organisation has been put in place to ensure significant customer and geographical coverage.

Patrik Bø Egeland, Partner at Herkules Capital, states that: "Herkules acquired the majority share of Projectiondesign late 2009 and has successfully implemented the investment strategy based on commercialisation and professionalization of the company. Barco contacted the owners with a proposal that was strategically right for the company. Barco and Projectiondesign show a unique natural and cultural match, while their technology offering and geographical coverage are very complementary. Barco has shown a serious commitment to strengthen their position in Projectiondesign's segment, and we are therefore confident that Barco will be a good owner of Projectiondesign going forward".

"Projectiondesign is one of the innovators in the projection market, and its projectors stand out in the way they combine technological innovation with leading design," comments Eric Van Zele, Barco's CEO and President. "The Projectiondesign product offering not only complements ours, but the acquisition also opens up opportunities to reach out into the mid-segment, including the Corporate AV market. Moreover this transaction will also open up Barco's global sales team and channel portfolio for Projectiondesign."

Herkules has sold all its shares in Projection Holding AS, representing 61% of the total number of shares in Projectiondesign AS, to Barco and the transaction was closed immediately after signing the share purchase agreement.

Contact:

Patrik Bø Egeland, Partner at Herkules Capital
Telephone: +47 22 04 80 07

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