Lighting firm adds to expertise with $3-million deal; plans to use solar power to drive product development
A Victoria-based company expects its deal for Alberta's AVVA Technologies to light the way to a brighter future.
Carmanah Technologies Corp. wants to marry its expertise in solar power with AVVA's experience in energy-saving LED (light-emitting diode) lighting that is installed on the edges of highway and commercial signs.
AVVA, based in Calgary, includes companies such as Pizza Hut, McDonald's and Canon on its client list.
While Carmanah also produces solar-powered LEDs, mainly for marine uses such as illuminating waterways and vessels, AVVA is a step ahead in making commercial signs.
"We've been learning fast but they know the nuances that we're still learning," said Carmanah CEO Art Aylesworth.
Global Securities Corp. analyst Marcel Brichon liked the arrangement, noting Carmanah paid about $3 million for AVVA, which should make about $3.5 million in revenues this year.
Brichon said Carmanah is excelling in a niche market that has potential.
"Carmanah looks like a leader in the industry. They really got off to a flying start in the marine industry and it's just spilled over."
Carmanah and AVVA have tentatively agreed on a share-purchase arrangement in which AVVA shareholders receive one Carmanah share for every eight shares held in AVVA.
Shareholders must approve the offer this summer and the deal isn't expected to close until September 30.
Aylesworth said that while some acquisitions are made to create operational savings, Carmanah expects this deal to grow revenues. Carmanah's revenues for 2002 were $6.5 million.
Aylesworth described the products as breakthrough technology and added Carmanah is one of the main players in the new industry.
He made his comments June 24 in Calgary, the same day he addressed AVVA's 20 employees on the merger.
No changes are planned for the workforce in Carmanah's 20,000-square-foot location in Victoria, where 52 people work, or to AVVA's 10,000-square-foot operation.
According to Carmanah, the general global illumination market is worth $12 billion. Everything from highway signs to commercial signs, to aviation, marine, rapid transit, truck and rail can potentially use energy-saving light emitting diodes.
LED lights use 90 per cent less electricity than normal light bulbs and don't need replacement for up to 27 years
Carmanah has coupled those LEDs with a low-maintenance solar power source that needs servicing only every five years.
Recently, the U.S. Coast Guard fitted 30 buoys with Carmanah solar-powered navigation lights in Umm Qasr in Iraq to aid resumption of commercial shipping.
The 701 model used is visible for up to five kilometres and requires no maintenance or servicing for up to five years.