The energy efficient lighting industry is poised for increased mergers and acquisitions in the near future, according to a new report by Robert W. Baird & Co.
The number of deals in the sector has experienced double-digit growth from 2009 to 2010, year-to-date, through September 30, 2010, the report says. The rising demand for energy efficiency products, technological advances, better manufacturing processes, government incentives, and growing interest in energy efficient lighting in emerging markets has helped drive the increase in M&A in the sector.
Energy efficient lighting currently makes up two percent of the $12 billion U.S. lighting fixture market, but is growing must faster than the total market, the report says. Baird believes the LED and high intensity discharge lamp sectors of the energy efficient lighting market show the most promise – the report says that demand for LED lighting is expected to grow at a compound rate of 35 percent through 2012.
Additional demand for energy efficient lighting could come from an upturn in residential and commercial construction, new incentives to encourage efficiency, and increased global demand for efficient lighting.
“The global push towards increased energy efficiency on the part of both consumers and governments provides a backdrop for further industry consolidation,” said Trish Hansen, director, who leads Baird’s electrical products and lighting investment banking effort. “Company-specific considerations include building economies of scale, gaining access to technology and intellectual property, and eliminating the high barriers to entry that exist in some segments of the market.”
