Allgon is a world-leading manufacturer of radio remote control solutions for industrial production with customers in the material handling, construction and transport sectors. It develops, manufactures and supplies solutions for industrial radio control to customers around the world. The company also has a long history of working with wireless communication. In recent years Allgon has focused its business on industrial radio control, in which it is one of the five largest manufacturers globally after the acquisition of Tele Radio in 2018, adding 220 employees and SEK 250m in sales to the group.
Allgon has decided to focus its efforts on the segment for industrial radio control solutions, leading to the acquisition of Tele Radio. As a result, Allgon is looking for new homes for its subsidiaries in the Connectivity segment. By streamlining its operations, Allgon wants to gain more exposure to the underlying market for radio remote control solutions, potentially boosting its organic growth and earnings. Also, M&A is possible, as the market for radio remote controllers is highly fragmented with a diverse range of manufacturers around the world.
Allgon acquired Tele Radio in Q3 2018 and management will focus on integrating it into the Allgon group in 2019. However, implementing a relatively large acquisition carries risks in terms of delays, realising synergies and managing foreign subsidiaries. Also, Allgon is sensitive to macroeconomic developments so a downturn in the macro economy could hurt its financial performance. Finally, Allgon operates in a highly technical niche market with highly qualified staff. Potential employees can therefore be hard to find and quite costly to hire.