If you look at Atlas Copco’s business area Compressor Technique, we have a high market share worldwide, but that means that we cannot grow aggressively through acquisitions in our core compressor business. Hence we have been looking at adjacent customer segments, products and technologies. Vacuum is one of the most attractive parts of the business. It’s growing on an annual basis, it has high margins, and a similar customer base and technology as compressors.

We can divide the vacuum market roughly in three parts. First, there is the high-end vacuum process that is used for example in the manufacturing of semiconductors, microchips and flat panels. The global use of these high-tech products will surely continue to increase enormously. At the same time production methods are becoming more effective with bigger wafers and bigger machines. Both these trends benefit Edwards because more vacuum will be required.  

A second part of the vacuum business is general vacuum when air is used as a utility, for example to move packages. This area is growing at the rate of the broader industry.  Here Atlas Copco has the possibility to outperform the market  because of its global coverage.  

A third leg is service. We can leverage Atlas Copco’s service strategy to reach a higher percentage of sales for the service revenue.

Service approach 

Both Atlas Copco and Edwards have roughly one-third of their employees working in service, but the two companies take on service somewhat differently. Atlas Copco mainly does on-site service, while most of Edwards’ service people are in re-manufacturing centers where they refurbish pumps. Edwards’ service model involves repairing and exchanging parts while Atlas Copco’s strategy includes monitoring to ensure the product is continuously working well. We call our approach climbing the service ladder.  One way for us to grow now is to apply this model to Edwards’ service business.

It will be business as usual for customers. We will not move or close any production sites. The quality and delivery of service they get today they will also get in the future, and it will in fact only get better over time because of Atlas Copco’s ability to invest long-term.  

Synergies

First and foremost, Atlas Copco and Edwards will exchange technology. For example, we may be able to accelerate the development of some of Edwards’s high-end pumps by sharing technology from Atlas Copco.  And vice versa, Atlas Copco in its development of new compressors can learn from Edwards. The technology for vacuum and compressors is related – both deal with air, after all, just from different ends of the scale, so there are great opportunities for sharing knowledge. 

Customer overlap 

There is a quite a big overlap. Take Atlas Copco’s Industrial Air division. About 60% of that division’s customers also use rough vacuum products. A typical customer is a small- to medium-sized manufacturing company. If you ask, ‘do you use vacuum?,’ many of them will say, ‘I don’t know.’ However, if you go into more detail and say, ‘do you have this kind of machine?’ they then say ‘yes,’ and, if we open the machine, there is the vacuum pump. A lot of customers use vacuum but are not really conscious they have it. A high portion of rough vacuum is sold through OEMs. A typical example is Heidelberg, the printing machine maker. They use a huge amount of vacuum in their machines. Most machines where you have some kind of mechanical process that needs a slightly cleaner environment uses vacuum to do that. 

From an R&D point of view we can certainly complement each other. Another opportunity is cross-selling. Edwards has customers to whom we are not delivering compressors, and Atlas Copco has customers to whom Edwards does not deliver vacuum.  In the rough vacuum area, where air is used as a utility, Edwards today does not really have a presence. That’s where we want to come in under the Atlas Copco brand. We will develop new products, and together we will have a much more complete offering.  

Capital, presence, technology 

Broadly speaking Atlas Copco will bring three things to Edwards: capital, presence and technology. First, we can provide capital for Edwards’s long-term investments. Second, Atlas Copco has more than 40,000 employees in more than 170 countries. In countries such as Russia and Brazil where Atlas Copco has factories and Edwards only has a small presence, we can use our presence to create a home for Edwards employees. And third, we will exchange technology.