In a mega-deal that solidifies its growing presence in the structured wiring market, Leviton Manufacturing Co. acquired OnQ Technologies Inc., Harrisburg, Pa., one of the “founding fathers” of the home networking market. The purchase price of the transaction between the two privately held companies was not disclosed.
The acquisition of OnQ Technologies is part of an ongoing process to support Leviton's growth as a leading supplier of home networking and residential products, said Harold Leviton, the company's president and CEO.
OnQ will be joined with Leviton Integrated Networks, the company's existing structured wiring division, to create Leviton OnQ. According to a Leviton press release, the two companies will have a combined market share of nearly 50 percent, and the new division will become “the dominant supplier in the growing structured-wiring market.” Doug Fikse, current president of OnQ Technologies, has been named president of the new wholly owned subsidiary. The new division's headquarters will be in Harrisburg.
Fikse and Leviton said in a letter announcing the acquisition that while technically Leviton is acquiring OnQ, this new venture is “more of a marriage between the two companies.”
“While Leviton is a much larger company, OnQ is the market leader in the structured wiring industry. We share similar corporate cultures, a vision toward the future and are certain that Leviton OnQ will take us farther than either company could have ventured independently in this category. Combining the No. 1 and No. 2 brands will lead to the development of new innovations and help drive market expansion for builders and installers.”
In an online video about the acquisition, Fikse said his company was attracted to Leviton because the company had “the resources and relationships with distributors, contractors and retailers that would have taken years to develop.” OnQ markets its products primarily through security, audio-visual and other low-voltage professionals.
Fikse also said one of the greatest challenges for the two companies will be to help builders create market demand for structured wiring systems. Part of the companies' strategy to accelerate market demand for structured-wiring systems is an educational campaign aimed at consumers.
Structured-wiring systems provide the physical backbone for residential voice and data networks, including high-speed Internet distribution, whole-house audio and video systems, security systems, lighting controls and home automation applications. The market for structured wiring systems is expected to exceed $500 million by 2004, according to research by Parks Associates, Dallas, a consulting firm that studies emerging residential technologies and services.
“Structured wiring is rapidly becoming an essential ‘fourth utility’ in homes, alongside electrical, gas and phone service,” said Don Hendler, executive vice president of Leviton. “That's why we view this acquisition as critical to our future growth.”
Hendler added that the acquisition combines key strengths from both organizations. “Leviton has strong relationships with builders, electrical contractors, distributors, home centers and retail chains, he said. “OnQ has similar relationships with security, audio/video and other low-voltage partners. Leviton has global manufacturing facilities and the strength of a global organization. OnQ brings in the culture of an entrepreneurial, nimble organization.”
Integration of the two organizations will occur gradually. For now, Leviton and OnQ will run in parallel, and existing relationships with channel partners will remain in place.
“Over time, we expect to blend the two organizations together, taking the best that each has to offer,” said Fikse. He added that this venture is going to create many new opportunities as the market expands.
Fikse predicted the new venture will promote growth and stability of the structured media market. “Builders have been looking to manufacturers for leadership in the structured wiring arena — especially in the area of increasing consumer awareness and demand. Until now, no one has had the capability to launch a sustained educational effort targeted at consumers. With our combined strengths, Leviton OnQ will be able to meet this challenge.
“Builders also want the security of dealing with a company that will be around a long time — a company they know. Leviton's name will give builders even more confidence in the future of structured wiring.”
The 97-year-old Leviton, one of the largest family-owned firms in the United States, is the biggest manufacturer of wiring devices in North America. OnQ Technologies is one of the pioneers in the field of residential structured wiring. Created in 1991 as part of AMP Inc., it developed the Smart House — the first commercially viable whole-house infrastructure for telecommunications, entertainment and control — in cooperation with the National Association of Home Builders. When Tyco International acquired AMP in 1999, the OnQ division was sold to the founding team.