Buddy Platform (ASX:BUD) has today announced a significant and game-changing deal. Buddy intends to acquire complementary smart lighting solutions company, LIFX.
The deal sees two Australian IoT (Internet of Things) businesses come together to capitalise on the growing demand for IoT solutions to create smart spaces.
The acquisition has valued the LIFX business at US$51million and Buddy is funding the acquisition with a combination of scrip and cash.
Buddy has also completed a Placement raising a total of $18.1 million from existing and new investors to fund part of the cash consideration of the deal.
LIFX was founded in 2012 and got off the ground via a kickstarter campaign. It went on to raise additional funding in a Series A seed round in 2014, securing investment from firms including Silicon Valley VC Sequoia Venture Capital, Qualcomm Ventures, and Australia-based Blackbird Ventures – all of which will become Buddy shareholders following the issuance of shares to LIFX’s current owners.
A smart match
Buddy and LIFX currently play in different segments of the market. Buddy provides commercial Internet of Things (IoT) and cloud-based data aggregation and energy management software solutions, whereas LIFX is focused on direct to consumer smart LED lighting products.
LIFX has sold millions of its smart LED IoT enabled bulbs to date in over 100 countries worldwide. Its products are sold via a network of distributors and major retailers including in Apple stores, Amazon, Google, Best Buy, JB Hifi and more.
Brining the two businesses together is also expected to open up cross-selling opportunities that will see Buddy able to access the retail consumer market for the first time. Customers could soon see a Buddy Ohm solution (Buddy’s energy management solution for buildings) available for home use.
LIFX has to date been sold direct to the consumer, but with access to Buddy’s distribution network it provides the opportunity for LIFX’s products to be sold into the commercial building sector.
The acquisition also brings technological synergies and the opportunity to enhance both product offerings. Buddy’s Works with Ohm program has already incorporated LIFX’s smart lighting to its suite of products that interoperates with its software.
LIFX lights are already highly capable sensor platforms, but do not include the ability to monitor and manage energy consumption – which Buddy Ohm does.
As the demand from both commercial and retail customers for energy monitoring solutions increases, it makes perfect sense that we look to combine our Buddy Ohm platform with a product that can be found in every building and every space in the world – lighting.”
Smart lighting key to smarter spaces
Lighting is used in every building and LIFX’s smart lighting products make the perfect product to deploy the Buddy Ohm platform. In the future it will be able to provide customers with smart insights into their energy consumption and usage.
CEO of LIFX Tim Peters is enthusiastic about the future of the LIFX-Buddy offering with this new partnership.
We are very excited to join forces with Buddy to expand our customer-base, further our reach, introduce real-time energy monitoring from our lights and enter new and exciting markets,” he said.
LIFX’s competitive advantage is that its bulbs can be controlled by WiFi and voice from any mobile device, without requiring a custom hub to be installed. It is the second largest provider of smart lights after global lighting giant Philips Hue.
Buddy’s CEO, Dave McLauchlan, is a huge fan of LIFX’s product offering and believes “it fundamentally changes the way we think about light. Not only are the LIFX bulbs lights, they have the ability to be a sensor device for other energy and environment monitoring in the home, making the possibilities for Ohm and LIFX endless,” he said.
Bright future for Buddy
Buddy Platform is now in the process of finalising the debt piece to fund the remaining portion of the acquisition.
With the market for IoT smart building technology expected to hit US$51.4 billion by 2023, Buddy is optimistic about the opportunities up for grabs.
We have a joint vision to meaningfully advance the movement to create smarter spaces globally, and together believe we can achieve some truly enormous goals,” said McLauchlan.
The acquisition of LIFX will also bring BUD $38.5 million in revenue and is expected to be earnings accretive, with LIFX expected to reach profitability in by the end of calendar year 2019.
This content is produced by Star Investing in commercial partnership with Buddy Platform. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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