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Sensata (ST) Pursues Inorganic Growth to Expand Portfolio

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In order to unlock new business opportunities and generate a steady revenue stream, Sensata Technologies Holding plc (ST - Free Report) is actively pursuing an inorganic growth strategy. The buyouts will enable the company to gain additional mileage within the fast-growing end markets for clean energy solutions and offer a comprehensive bouquet of products for electrification and replacement of combustible applications. The acquisitions are also likely to help realize synergistic benefits in various industrial applications.

The company recently inked an agreement to acquire Spear Power Systems. Based in Grandview, MO, Spear Power Systems has made a name for itself with market-leading lithium ion battery storage systems for land, sea, and air applications since its inception in 2013. These cell-agnostic storage solutions offered proprietary battery management and monitoring capabilities along with innovative features like reliability, high energy density, and modular architecture.

The buyout of this lithium ion battery storage systems manufacturer will enable Sensata to expand on the market leverage gained through the earlier acquisition of Denmark-based startup Lithium Balance and widen its scope of work in the electrification and battery management systems market.

Earlier this year, Sensata completed the acquisition of Xirgo Technologies Intermediate Holdings, LLC — a leading telematics and data insight provider — for $400 million. Since 2006, Xirgo has provided innovative wireless IoT communication devices for a wide range of applications across multiple markets. Its annual revenues are expected to exceed $100 million in 2021, with estimated revenue growth of more than 20% over the next several years.

The buyout of Xirgo’s high-growth business significantly accelerates Sensata’s Smart & Connected initiative. It reinforces Sensata’s position as a data insight provider across transportation and logistics end markets. The acquisition brings complementary capabilities and boosts its strategy to expand beyond original equipment manufacturers and address the broader fleet ecosystem. Sensata’s total addressable market for its Smart & Connected product offerings is expected to more than double to $15 billion by 2030.

Known as the pioneer in mission-critical solutions, Sensata has a diversified portfolio of personalized and unique sensor-rich applications from automotive braking systems to aircraft flight controls that are utilized ubiquitously. These sensors are specifically designed to address complex engineering and operating performance requirements that help customers solve significant challenges in industrial, heavy vehicle, off-road, and aerospace industries.

Sensata also has a rich portfolio of high-voltage protection and battery management systems. The joint venture with Churod Electronics has further expanded its electrical protection capabilities for mass-market applications. Sensata’s sensing solutions business has a strong product portfolio and greater scale to capitalize on attractive opportunities in the multi-billion global automotive sensor market. Moreover, the company believes that its evolving portfolio and accretive customer base serve as the cornerstone for its long-term growth across a diverse set of markets.  

Being a leading provider of mission-critical solutions, Sensata benefits from cost-effective operations. The company offers a streamlined set of products, which helps in eliminating redundant costs and gives greater pricing flexibility. It invests in cutting-edge technology that enables the hybrid and electric vehicles to be more efficient, cost effective, robust, and safe. The company is expanding its electrification ecosystem to facilitate the seamless transition to electric vehicles as it aims to be a leading provider of mission-critical sensor-rich hardware and software solutions.

Such opportune acquisitions are likely to help Sensata better compete with other industry players such as Allied Motion Technologies, Inc. (AMOT - Free Report) , Transcat, Inc. (TRNS - Free Report) , and Watts Water Technologies, Inc. (WTS - Free Report) .