Coats Group Diversifies to Fiber Optic Market

Leading thread manufacturer, Coats Group has bought two businesses related to fiber optic businesses for a combined value of $45m. Coats hopes to expand its influence in the growing and highly profitable fiber optic market segment.

The Coats, which makes threads, yarns, and fabrics for both industrial clients and ordinary consumers, has acquired Barcelona-based Gotex, which produces high-tech industrial yarns and tapes used by telecommunications, energy and oil and gas companies to protect and insulate cables and pipes from extremes in temperature, rodents, fire, and water.

Gotex’s unique fiberglass coating technology and products will complement Coats’ existing coated aramid product range.  There are many synergies between the product offerings and together, the companies will be able to provide an enhanced range of products to the fiber optics cable industry.  The acquisition reinforces Coats’ strategy of expanding into value-added engineered yarns.

Gotex is headquartered near Barcelona, Spain and has approximately 60 employees.  It has three main categories of products:

·         Technical yarns – yarns transformed via unique and proprietary coating technologies, used in the cable industry to reinforce, insulate and protect optical fibers.

·         Technical woven tapes – woven high technical fibers, such as fiberglass, aramid or carbon used to protect cables from impacts, rodents, etc and in composites.

·         Product trading – buying and selling additional products that cannot be manufactured in-house eg mica tapes, FRP rods, plastic films.

Its core customer base is fiber optic cable manufacturers, although oil and gas flexible pipe producers and high-tech sports equipment manufacturers are also growing areas.

Coats Group plc is a British multinational company. It is the world’s largest manufacturer and distributor of sewing thread and supplies, and the second-largest manufacturer of zips and fasteners, after YKK.

Fiber optics account for 85pc of Gotex’s business and the acquisition will boost Coats’ share of the market to 15pc. Demand for protecting fiber optic cables has soared as telecommunication companies around the world work to roll-out the technology.

Coats paid $28m for the business, with a further payment of up to $4m after a two-year period, provided Gotex achieves certain performance targets.

Additionally, Coats has paid $9m to acquire UK company Fast React, which provides software for clothing and footwear manufacturers, with a further $4m earmarked for performance-related payments.

Fast React helps companies manage their textile manufacturing lines and supply chains, and has benefited from growing demands from retailers for faster production. Its software allows manufacturers to improve productivity and get products to retailers more efficiently.

Paul Forman, chief executive of Coats Group, said both businesses had shown strong growth over recent years. “We are confident this will continue under Coats ownership,” he added.

Revenue from industrial sewing materials, which includes everything from surgical sutures and protective clothing to teabag strings and car interiors, currently makes up more than 80pc of Coats’ business. The remaining 20pc is generated from craft sales, such as sewing threads and fabrics sold to consumers.

The company is the largest player in the North American textile crafts market and is the world’s leading supplier of thread to clothing and footwear manufacturers. In 2015 it made £1.49bn in revenue.

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