Helios Technologies, an industrial electronics conglomerate, announced it completed its $218.5 million acquisition of Balboa Water Group. Before being purchased, Balboa specialized in fabricating solutions for the health and wellness sectors.
Helios anticipates the transaction will increase its full-year 2020 revenue by $20 million to $22 million.
Why Helios Bought Balboa
In mid-October, Helios revealed it had made a definitive agreement with AEA Investors to buy its electronic device subsidiary.
At the time, the purchaser noted acquiring Balboa would further two of its long-term objectives. First, the merger would enable it to expand its product portfolio with some valuable new assets. The corporation stated Balboa’s proprietary electronic controls, jets, pumps, and white goods occupied leading positions in its target markets.
In addition, Helios appreciated that Balboa’s offerings had been successfully distributed in 47 countries. And its ownership of a cutting-edge production facility located in Baja, Mexico made it even more enticing.
Secondly, the corporation wanted to expand its market presence and diversify its revenue streams. Prior to the transaction, Helios primarily dealt in motion control, hydraulics, manifold offerings for the industrial and civic infrastructure sectors. But by taking over Balboa, it has broken into the consumer electronics field.
Because of the market advantages it could provide, Helios made snapping up Balboa a major priority. In fact, the firm went as far as to secure $900 million in credit to finance the deal. At present, the manufacturer’s market capitalization is $1.55 billion. However, since the merger will make an eight-digit contribution to the acquiring company’s income this year alone, it looks to be a wise investment.
The $1 Billion Plan
In 2018, Helios unveiled a long-term strategy to bring its annual income $1 billion by 2025. The conglomerate sought to achieve its goal by expanding its product catalog, bolstering its market presence, and acquiring complementary businesses. Its leadership believed its game plan would substantially increase its core business while doubling its electronics revenue.
Cognizant of then-present market volatility, Helios expected to encounter one “mild recession” along its journey.
In reality, the firm joined the rest of the world in grappling with the coronavirus pandemic’s economic impact. The global health crisis prompted a 12 percent year-over-year decline in its annual and an operating loss of $17.2 million in the first quarter. At that point, it had not exited a quarter in the red in over a decade.
In August, Helios revealed its Q2 sales and net income contracted by 17 and 25 percent year-over-year. One quarter later, its revenue declined by another 11 percent while its profit rose by 2 percent.
Despite the setbacks, the manufacturer did not deviate from its roadmap. It secured the resources necessary to complete the Balboa acquisition and plans to build out its entire electronics division. Like many companies, Helios sustained damage from this year’s unprecedented events. But one major challenge behind it, the conglomerate is back on course to successfully executing its endgame.