PARIS — A fast-growing French company specializing in satellite-based maritime surveillance and positioning has purchased a U.S. oceanography and meteorological services company serving the offshore energy market.
In an all-cash transaction, CLS of Toulouse, France, which is majority-owned by the French space agency, CNES, is purchasing Horizon Marine Inc. (HMI) of Marion, Massachusetts, with its principal operating office in Richmond, Texas.
HMI, which employs 22 people, reported revenue of $8.5 million in 2014 and expects that figure to grow to $10 million in 2015 despite the fact that its main business is serving the oil and gas exploration industry in the Gulf of Mexico.
CLS Managing Director Christophe Vassal declined to disclose the value of the transaction, which he said CLS would finance from its own cash flows in addition to a loan.
Vassal said CLS reported revenue of 96 million euros ($109 million at current exchange rates) in 2014, up from slightly more than 90 million euros in 2013. For 2015, the company is targeting revenue of 107 million euros including the $10 million contribution from HMI.
With oil prices down by around 50 percent in the past year, it might appear to be a good time to acquire energy-sector service companies reeling from price drops. But Vassal said HMI’s focus on the Gulf of Mexico has shown no signs of slowing down, in part because oil-rig operators need precise weather and tidal information now more than ever.
“HMI has enlarged its service offering to include routing of oil platforms as they are towed to production fields,” Vassal said. “These operations occur at slow speed [and] are very sensitive to strong currents, which could add delays. If you can gain one or two days in a month-long operation, it has great value.”
That is where CLS’s satellite experience will add to HMI’s 33 years of work with the energy sector. HMI’s portfolio includes gear that can spot eddies. CLS has developed operational tools derived from the U.S.-French Jason satellite series of ocean-altimetry satellites.
Vassal has said for several years that CLS needed a larger footprint in North America. With the existing CLS America and now HMI, the company in 2015 will be doing about $20 million in annual business there, and it hopes its satellite expertise will help HMI enter markets off the coasts of Africa, Australia and Asia.
CLS manages some 40,000 satellite transmitters globally, placed on floating buoys, fishing fleets and tagged animals whose migrations are tracked. The company also uses radar and ocean-altimetry data to provide services to European governments. The company uses data from 80 instruments on 40 satellites.
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Vassal said the European Commission’s Copernicus environment-monitoring program, whose Sentinel radar and optical satellites will distribute data free of charge to European institutions, should stimulate business by encouraging CLS customers to use increasing amounts of raw satellite data that CLS can turn into usable products.
Vassal said the company has set a goal of around 150 million euros in revenue in 2018, with a staff that at that point should be around 600 people compared to 525 today including HMI. Both CLS and HMI have small operations in Brazil that will be combined.
CLS is 54 percent owned by CNES and 14 percent by France’s IFREMER ocean-research institute. In 2013, Ardian, a private-equity investor, purchased a 32 percent stake. CNES has been selling off most of its subsidiaries in recent years and has signaled its approval for an eventual sale to industry of its stake in the Arianespace launch consortium.
But Vassal said neither CNES nor Ardian appears in any rush to conclude a transaction, even if Ardian becoming a majority shareholder is a likely event at some point, perhaps through a gradual dilution of the CNES stake through capital raises.
Vassal said CNES has never been an obstacle to external growth and that the HMI acquisition likely would not have occurred more quickly even if Ardian was the majority stakeholder. “In the five years before Ardian arrived in 2013, we concluded five acquisitions at CLS,” Vassal said.
