Chinese company Johnson Electric (HKSE: 179) announced today that it had acquired 51% of Israel start-up Nanomotion for $20 million in cash.
Located in Yokne’am, Nanomotion develops and manufactures motors with the ability to achieve precise positioning, and markets them to the semiconductor and medical equipment industries. Founded in 1992, Nanomotion has raised $5 million from venture capital funds Marathon Venture Capital Fund (TASE: MARA) (which owns 20% of Nanomotion), Mofet Venture Capital Fund Management, Pitango Venture Capital, Charterhouse-YLR Investments, and Israel Infinity Fund, which manages the portfolios of Clal Industries and Investments (TASE: CII) and Gildor Investments.
Johnson Electric is a global leader in integrated motor systems. The company employs over 33,000 people in fourteen countries around the world. Johnson Electric has design engineering centers in China, Japan, the US, Italy, and Hong Kong. Most of the company’s workforce is in China. The Israeli investors in Nanomotion will retain an aggregate 49% share.
Johnson Electric will also invest several million dollars more in Nanomotion, without further diluting the existing shareholders. The other investors expressed satisfaction with the deal, since they expect that a partnership with a giant company like Johnson Electric will help Nanomotion achieve its strategic goal of penetrating larger markets.
The acquisition of Nanomotion is the first step in Johnson Electric’s strategic plan to consolidate its status as a leader in the micro-motors field. Johnson Electric senior VP strategic marketing said, “Johnson Electric’s intention is to build a portfolio of diverse technologies to address the motion markets of the future. Our customers are demanding more power and velocity range from smaller size motors. Nanomotion’s engineering strength, in combination with Johnson Electric’s global sales reach and manufacturing strength, will open up new markets for ceramic motor technology.”
Nanomotion president and CEO Miko De-Levy said, "We are very pleased as Nanomotion is poised for huge growth because of our imminent entry into mass market applications. Johnson Electric provides us with the necessary marketing and high volume manufacturing strength to make that transition."
De-Levy said that Nanomotion had two categories of business: “The company provides precise systems solutions for the electronics and semiconductor industry, medical equipment, and automation in general. Our new field, which we will enter jointly with Johnson Electric, and in which the two companies will complement each other, is the consumer solutions market: scanners, cameras, mobile telephones, for example. We’re only starting to address these markets, and Johnson Electric can promote our activity in the field through its marketing channels and large-scale manufacturing capability.”
Infinity Venture managing partner Amir Gal-Or worked behind the scenes with Marathon executives to promote the deal. Infinity is a partners in an Israeli-Chinese venture capital fund, together with Clal Investments and Chinese concerns. The fund is currently raising $75 million. Gal-Or says that among other things, the current deal took advantage of good connections with Chinese companies: “We still have 49% of the company, and for the first time, Israelis will be on the board of directors of a company under Chinese control. In addition, we have options to sell, subject to the company’s achievements in the coming years.”
Gal-Or added that Infinity planned to continue taking advantage of its good connections in China, and similar deals could be expected with other portfolio companies.
Published by Globes [online] - www.globes.co.il - on October 31, 2004