Linear continued to pursue an aggressive acquisition strategy with the purchase of Niles Audio, a major supplier of whole-house audio/video distribution and integration products for custom installers.
As it did with its previous acquisitions, Linear will give Niles autonomy in sales, marketing and product development while consolidating legal, financial and human resources functions, said Niles' executive VP Frank Sterns. Linear will also let Niles take advantage of the economies of Linear's electronics factory in China “if the product is appropriate,” Sterns added.
Linear was pursuing Niles “for a long time,” he noted.
In recent years, Linear has acquired multiple custom-installation suppliers, including distributed-A/V supplier ChannelPlus, multiroom-A/V equipment company ELAN Home Systems, intercom and central vacuum supplier M&S, component-mounting-equipment supplier OmniMount, structured-wiring company OpenHouse, speaker and electronics supplier SpeakerCraft, and IR-distribution supplier Xantech. Earlier this year, Linear acquired Panamax, the maker of surge-protection and power-conditioning equipment.
“Niles is another remarkably good fit for us,” said Linear's chairman Grant Rummell. “This acquisition continues our pattern of joining together profitable, well-run companies and encouraging them to operate with a high level of independence, while taking advantage of the efficiencies and economies derived from integrated manufacturing, distribution and support.”
Linear's parent, privately held Nortek, offers products and systems for commercial, industrial and residential applications. It is a worldwide supplier of wireless residential security systems, intercoms, garage door operators, gate operators, short and long-range radio remote controls and medical/emergency reporting systems.
Although the product offerings of such Linear companies as Niles, SpeakerCraft and Elan do overlap with Niles's lineup, Sterns said, each company has its own “strengths and core customers.” Niles, for example, “does a lot of business” with retailers such as Tweeter and The Good Guys, while SpeakerCraft doesn't. SpeakerCraft offers a program for members of the Home Theater Specialists of America (HTSA) buying group, but Niles doesn't. Niles distributes through AVAD distributors, but SpeakerCraft doesn't. As for Elan, that company offers more high-end products than Niles, including touch screens, while Niles focuses more on more mainstream devices such as in-wall keypads and volume controls, Sterns explained.
Linear's strategy is “to let the companies compete and drive their own innovation and have their own personality,” Sterns continued. “As long as a customer chooses a Linear company, it's OK.”
Underscoring Linear's hands-off approach, Niles will continue its recently revamped product and distribution strategy in which three separate product lines are dedicated to separate distribution channels with margins customized to each channel. The strategy, Niles said back in May, was intended to reduce the channel conflict that occurs when security and satellite-TV distributors and installers enter the custom-A/V market and when regional distributors seek a national footprint.
Niles sees additional opportunities resulting from the acquisition. Niles “will gain through exposure to new opportunities,” said Sterns. Niles' owner Ivan Zuckerman said he expects our business “to grow through association and continuing innovation.”
The acquisition won't result in layoffs at Niles, Stern said, “because we still need the people we have.” Human resources consolidation, he explained, will enable Niles to better buy such things as benefits, now that Niles's 175 employees are part of a 7,500-strong company.