Due Diligence prior to corporate acquisition
Strix is a global leader in the design, manufacture and supply of kettle safety controls and other components and devices involving water heating and temperature control, steam management and water filtration.
Strix has 60% of the global kettle control market and their products are used an estimated 1 billion times a day across the world.
Dehns’ relationship with the company now known as Strix dates back to the 1960s.
Strix was considering the acquisition of a competitor in the water filter market, an Italian company called LAICA S.p.A., which already had an established IP portfolio in the same technology field. Strix felt that purchasing LAICA would help them expand their product portfolio and grow their business and market share.
As part of this potential acquisition, LAICA had provided Strix with a basic list of their IP portfolio, including patents, designs, trade marks and domain names. The list was in the form of raw database entries without any technical or commercial context. The Strix IP Manager approached Dehns Partner, Laura Ramsay, on 9 January 2020 and asked Laura to undertake a due diligence exercise on LAICA’s IP portfolio to verify the list and provide analysis into the various IP rights.
Strix asked for this to be completed in just five weeks.
Initially, Dehns appointed a search company to conduct an independent search of all IP patent and design rights registered by LAICA and associated companies to ensure and verify that the list was accurate.
Once the search company confirmed that the list was accurate, Laura and her team reviewed every single patent and design right to check on the technology being protected and the territories where protection had been granted. Laura carefully mapped all the patents (38 families) to various types of technology areas. Laura was able to identify technology areas of interest based on her knowledge of Strix’ product lines and commercial landscape.
In the end, Laura identified five groupings of technology and provided the client with a comprehensive overview of the patent portfolio with technology breakdown. Laura made sense of the patent portfolio which provided Strix with the opportunity to identify areas which fitted in to their product strategy.
In relation to the trade marks and domain names in the IP portfolio, Dehns Trade Mark Partner Clare Mann handled the verification of the list provided by LAICA. Through her in-house research, Clare identified a number of additional trade marks not included in the list. Liaising with a domain name registrar, Clare also found a number of domain names which were not listed. The identification of these additional IP rights added further value to the portfolio.
On 13 February 2020 (i.e. just over four weeks after instruction), Laura submitted a report to Strix’s IP Manager which provided a coherent overview of LAICA’s IP portfolio, so Strix knew exactly what they would be buying and what was being protected in which territories. Following the delivery of the report, Strix entered into negotiations to acquire the LAICA IP portfolio and, in August 2020, Strix asked us for advice on obtaining an independent IP portfolio valuation. As their IP advisors we were not in a position to provide an independent valuation, so we recommended an IP Valuation specialist with whom we had recently worked on a very similar project. Strix took our advice and used the specialist to provide the valuation.
Strix was delighted with the valuation report, and the detail it went into.
On 23 September 2020 Strix acquired LAICA for c.€20m, with a possible increase up to c.€30m, subject to certain conditions and financial targets being met over the next few years.
This is a major strategic acquisition for Strix, and the due diligence exercise undertaken by Dehns added significant value to the acquisition process by helping them fully understand exactly what was in the IP portfolio and how it mapped on to various technologies to help identify strategic opportunities.
In addition, through our extensive network of contacts in the IP world, Dehns was able to recommend the most appropriate third party to provide the valuation which allowed Strix to negotiate effectively on the value of the LAICA IP portfolio.
This case study demonstrates: Dehns’ speed and responsiveness; the ability to cover different types of IP; how Dehns adds value to an M&A process; and how our network can support clients with what they need.