Why Control4’s Deal for Pakedge Creates a Home-Automation Powerhouse
Pakedge is known in the industry for its many networking innovations and home automation solutions.
In what may be the smartest acquisition ever in the home-technology channel, leading smart-home manufacturer Control4 (Nasdaq: CTRL) has acquired Pakedge, the No. 1 brand of networking gear among CE Pro 100 home-technology integrators.
The synergies are clear to anyone with the vaguest understanding of the home-technology integration market:
- Control4 makes mid-market systems for home automation and multiroom audio/video distribution.
- Pakedge makes robust networking gear optimized for smart homes.
- Both companies sell directly to independent dealers who sell, install and support connected-home (and commercial) systems.
- Both firms are tops in their respective categories among CE Pro top 100 dealers.
- Most dealers who install custom home-control systems like Control4 also spec, install and support the network infrastructure as well.
- Pakedge has about 1,700 independent dealers, of which 560 are Control4-certified dealers.
- Control4 has about 3,100 dealers in North America, of which 500 are currently Pakedge dealers.
A couple of weeks ago, when Control4 announced its new EA Series home controllers, CEO Martin Plaehn told CE Pro that Control4 was more of an infrastructure provider rather than a smart-home device manufacturer.
To that end, Pakedge makes a perfect partner.
“We now have Pakedge joining the family with networking solutions that are really designed to scale,” says Jeff Dungan, senior VP, supply chain and business development for Control4. “Networking is the foundation—making sure everything in the home communicates well together. Especially as there’s more downloadable content, more high-definition streaming services, the network becomes even more critical.”
Control4 paid about $32.7 million in cash for Pakedge, which had approximately $18.5 million in sales in 2015. Control4, which reports 2015 earnings today, had revenues of $120 million for the nine months ended Sept. 30, 2015. Control4 expects the acquisition to contribute to revenue growth, and to be accretive to both gross margin and EPS on a non-GAAP basis for the full-year 2016. Pakedge adds about 80 employees to Control4’s original 540 staffers.
Control4 has been vocal about its desire to grow through acquisitions. Last year, it purchased Leaf, a manufacturer of high-performance A/V-distribution products, for $9 million. A few months earlier, it acquired home automation software partner Extra Vegetables for about $900,000.
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