In September 2021, TE Connectivity completed the acquisition of ERNI Electronics. Markt&Technik asked Vish Ananthan, Senior Vice President and General Manager of TE Connectivity's Industrial Business, why this acquisition is a win-win situation for all parties involved.
Markt&Technik: What was the purpose of this acquisition of ERNI Electronics? Was it to fill a gap in TE’s product portfolio? Was it to get access to new market segments? Or was it something different?
Vish Ananthan: First, let me paint a bigger picture perspective of our company and our strategic direction. Our company strategy is to increase our presence in market areas that are benefiting from key macroeconomic trends such as electrification of the powertrain in transportation, renewable energy, factory and building automation as well as cloud infrastructure. Although we already have an outstanding product portfolio in all these areas as well as world class engineering and manufacturing capabilities and competences, we do see some gaps in our product portfolio.
That’s where ERNI comes into play, isn’t it?
You are absolutely right. We did a thorough assessment of how to address those gaps, and in some cases we decide that an acquisition is the fastest and the best way for us to address those gaps.
We have known ERNI for several years as a very reputable and innovative player with a very strong presence in the automotive, as well as the industrial automation market. These two markets are significant and strategic for TE. ERNI is leading when it comes to fine pitch and high speed printed circuit board connector products, and those have been gaps in our product portfolio. This acquisition gives us access to these products and allows us to serve our combined customer base better than each company could on its own.
What about ERNI’s engineering and manufacturing capabilities?
ERNI has two great locations in Adelberg, Germany, and in Lamphoon, Thailand. They are very complementary to our footprint, and we will continue to strengthen the capabilities in these locations and taking them to a much better position as today. So all in all, it's a product portfolio expansion, as well as a customer base expansion.
Can you disclose how much was this transaction?
Our CEO has shared in the last earnings call that we paid close to 300 million US-Dollars. It's a significant investment TE has made. From this you can see how committed we are to the automotive and industrial markets. We are looking forward to taking ERNI’s products, as well as their manufacturing capabilities, and serving our joint customer base better.
Will ERNI remain as the independent business unit within TE, or will it be integrated into another business unit?
At TE, we have a tailored integration philosophy, depending on the nature of the acquisition. We don't have a cookie cutter approach that we apply across the board in a uniform way. When we make an acquisition, we also develop a thoughtful integration approach as part of our due diligence process. In the case of ERNI, we have decided to combine its business with TE’s industrial equipment business unit.
It will be a step by step integration process determined by our integration philosophy of putting customers first and serving their needs as well as the rate and pace of the organization’s ability to digest all the changes that come with the integration such as systems and processes.
ERNI is a well-established brand. Will TE continue this brand name?
When we do an acquisition, the question what to do with the brand is a key consideration that we keep in front of us as we decide how to integrate the company.
Let me use a recent acquisition that the industrial business unit made as an example. Five years ago, TE acquired Intercontec, a reputable family-owned company that has been a market leader in servo-motor connectors. We retained the brand, invested in the brand, and took it to more geographical regions that Intercontec did not have a presence in. This has been a successful acquisition for us, and customers continue to love the brand.
Our approach for ERNI is going to be similar. This is a company that has 75 plus years of history, a very strong reputation in the market, and an exceptional brand strength. So, our intent here would be to continue to use ERNI as a product brand and expand the product portfolio further to make the brand even more relevant in the market.
Vish, many thanks for taking the time.
This interview was conducted by Ralf Higgelke.
ERNI Electronics GmbH, TE Connectivity