15 Mar 2022
US-based Luna acquires distributed fiber optic monitoring division; sells Luna Labs unit to focus on optical technologies.
Luna Innovations, the Nasdaq-listed US company, has sharpened its focus on fiber-optic technologies, with the acquisition of the “LIOS” sensing business from Denmark’s NKT Photonics.
Bought for €20 million in cash, the deal sees Luna acquire a leading exponent of distributed temperature and strain sensors used in civil engineering and other infrastructure projects.
The LIOS business switching to Luna comprises sales, development, and production activities - including a main site in Cologne, Germany, and a sales office in Portland, Oregon. Some 66 employees transferred to Luna, with the deal completed March 10.
Luna said that it had also sold a majority stake in its “Luna Labs” division to a private equity consortium for approximately $21 million, enabling it to concentrate its efforts on fiber-optics. Back in December 2020, the company had acquired OptaSense from the UK-based defense technology group QinetiQ.
Pure-play fiber optics
Commenting on the LIOS switch, Luna’s CEO Scott Graeff said: “The acquisition of LIOS marks an important milestone for Luna. We are bringing together two complementary businesses which will further support our growth trajectory.
“Combining LIOS’s market-leading position in temperature and strain sensing with Luna’s broad fiber optic offerings allows us to capitalize on significant technology advancements and enhanced market opportunities. We are very excited about welcoming LIOS to the Luna team.”
Regarding the Luna Labs transaction, Graeff added: “The sale of Luna Labs marks a final step in the simplification of our portfolio; something we announced several years ago when we set our strategy to focus our capital and resources on the fiber optics markets.
“With this divestiture, Luna is now a pure-play fiber optic-based technology company, and we look forward to leveraging our industry-leading, proprietary fiber optics platform to better serve our customers and to generate long-term growth for our investors and employees.”
NKT, which had acquired the LIOS sensing business in 2016, said that the sale to Luna would allow it to fully focus on its core businesses of lasers and other fiber optic solutions across several major market sectors.
Its CEO Basil Garabet suggested that although the LIOS sensing business had great potential, it lacked synergies with the firm’s other photonics-related activities.
“We are delighted to provide the LIOS team with a new home at Luna dedicated to sensing solutions, and to focus NKT Photonics on our core business,” he added.
NKT also said that in 2021 its revenues excluding the LIOS sensing business amounted to approximately €68 million.
Meanwhile, Virginia-headquartered Luna reported sales revenues of $24.2 million for the closing quarter of 2021, bringing its annual total to $87.5 million - up 48 per cent on the pandemic-impacted figure for 2020.
Despite that increase, the company swung to an operating loss of $2.6 million, but Graeff and his executive team expect that the addition of LIOS will help propel annual sales to around $112 million this year.
“In many ways, 2021 was a pivotal year for Luna Innovations, and that has continued into early 2022,” reflected the CEO. “We integrated the OptaSense acquisition, and subsequent to year-end, completed the divestiture of Luna Labs and acquired LIOS Sensing."
With a record backlog of orders now in place, Graeff added: “Across our sensing and communications testing businesses, we realized some of the largest customer orders to date and penetrated into new geographies and markets, while implementing systems to support growth.”
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