Q&A:TOMRA’s acquisition of Compac

TOMRA signed an agreement with the owners of Compac Holding Ltd (Compac) on October 11, 2016 to acquire 100 percent of the shares in the company. In this article, members of TOMRA and Compac management provide answers to key questions surrounding the acquisition.

For further background about the acquisition, see also the announcement provided by TOMRA to the Oslo Stock Exchange.

Q: What is TOMRA’s motivation for acquiring Compac

A: (Stefan Ranstrand, CEO of TOMRA)
Compac has attained a leading position within an attractive market segment that offers a strong strategic fit with the food sorting solutions provided by TOMRA. By bringing Compac’s lane sorting solutions together with TOMRA’s bulk sorting solutions under one roof, we will be able to offer a unique proposition to our customers for sorting fresh and processed foods.

Further, we will be able to gain significant synergies with regard to technology development, supply chain and production processes, as well as sales and support functions worldwide. TOMRA and Compac also share a similar entrepreneurial background and company culture, and I look forward very much to joining forces and what we will be able to achieve together in the area of food sorting.

Q: What is the difference between the lane sorting solutions provided by Compac and TOMRA’s bulk sorting solutions?

A: (Stefan Ranstrand, CEO of TOMRA)
A bulk sorter normally sorts into two (or maximum three categories) in one “sorting cycle” (with grading limitations), and handles up to 40,000 objects per second (or up to 50 tons per hour). A lane sorter sorts a commodity in up to 20 product categories with a capacity of up to 48,000 objects per hour.

Both sorting platforms provide processors with the opportunity to increase revenues, reduce costs & labor, improve food safety, reduce food waste, improve productivity and traceability, and shorten processing times which is a key aspect for fresh products. A broad range of sensor technologies can be utilized including camera, laser, NIR, UV and different light emitters (e.g. LED, pulse LED, halogen).

Currently a larger assortment of sensing technologies are being applied within bulk sorting, however together with Compac we will explore the possibilities of integrating additional technologies for lane sorting.

Q: What motivated Compac to sell the company?

A: (Hamish Kennedy, Compac Founder and majority shareholder)
A little over 30 years we started in a garage and today Compac is the global technology leader in fruit sorting and employs over 700 people worldwide. There is tremendous opportunity for further development and growth and we recognize that this requires more resources than we have available. The shareholders have been looking for a partner to help realize this opportunity and see TOMRA as the perfect fit, both in terms of their commitment to the sorting industry and their culture and professionalism.

Q: How will Compac be integrated into TOMRA?

A: (Stefan Ranstrand, CEO of TOMRA)
Compac will remain a stand-alone business within TOMRA, and the company’s central R&D, production and management functions will remain based in New Zealand.

Q: If Compac will be organized as a stand-alone business, how do you envision being able to create synergies?

A: (Stefan Ranstrand, CEO of TOMRA)
We will start by creating teams consisting of personnel from both organizations within four primary areas: marketing and sales, operations/supply chain management, research and development, and human resource development. These teams will begin looking for ways in which we can augment existing processes and create synergies throughout our operations.

Q: How can TOMRA contribute to Compac’s development?

A: (Stefan Ranstrand, CEO of TOMRA)
TOMRA is investing in Compac because we believe in its growth potential and ability to contribute value to our shareholders. And, by pooling our resources, we will be able to open up new growth opportunities for both companies. For example, we are already working on combining a TOMRA bulk sorting solution with an existing Compac lane sorting installation at a citrus production facility in the US. And many of our TOMRA Sorting Food customers have asked for grading solutions, so I am confident that our working together will be mutually beneficial for both TOMRA and Compac – and our customers.

Q: Are there any other ways that this acquisition will benefit the customers of TOMRA and Compac?

A: (Volker Rehrmann, Head of TOMRA Sorting)
Bringing TOMRA and Compac together will enable us to have an even better market coverage with increased sales and support resources. We will be in a better position to be an industry thought leader and sparring partner for our customers and other stakeholders. The combination of both companies’ technology portfolios and capabilities will also allow us to create unique solutions for unmet market needs. For example, together we can better work on the development of solutions within the areas of connectivity, smart data and IoT solutions.

Q: As TOMRA is headquartered in Norway and Compac on the other side of the world in New Zealand, do you foresee any challenges in this regard?

A: (Stefan Ranstrand, CEO of TOMRA)
Actually I view this as a positive aspect in that we will now have a stronger presence in that part of the world, and likewise Compac will gain a stronger presence in Europe. Compac has an excellent management team and TOMRA is not going to micro-manage their operations. Compac CEO Mike Riley will report to me.

Q: Who should existing customers of TOMRA Sorting Food and Compac contact regarding product questions?

A: (Stefan Ranstrand, CEO of TOMRA)
I would ask that customers continue to utilize their existing contacts within TOMRA or Compac, and we can then direct their inquiries to the appropriate people internally.

Q: What impact will the acquisition have on Compac’s organizational structure?

A: (Mike Riley, CEO of Compac)
As Stefan stated earlier, Compac will remain a stand-alone business within TOMRA, and the company’s central R&D, production and management functions will remain based in New Zealand. We will begin looking for ways in which we can augment existing processes and create synergies throughout our operations. We remain committed to investing in market-based teams to support our growing customer base, and to look forwards to achieve efficiencies in our operations through consolidation and investment in systems and processes which underpin sustainable growth.

Q: How can Compac contribute to TOMRA’s development?

A: (Mike Riley, CEO of Compac)
Our presence in the Asia Pacific markets will open new doors for TOMRA’s food sorting solutions. Our solutions in lane sorting for our core commodities of apples, kiwifruit, cherries, citrus, stonefruit and avocados can all be complemented by TOMRA pre-grade capabilities. Our strategic relationships with key global customers will help drive further insight into the needs of the food industry and augment the strategic thinking of both companies as we aim to anticipate and solve fundamental sustainability challenges that face our customers and the planet.

Q: Does TOMRA intend to make additional acquisitions within the food sorting industry?

A: (Stefan Ranstrand, CEO of TOMRA)
We are focused more on quality rather than quantity. We acquired Odenberg and BEST in 2011 and 2012 respectively, and since then we have focused on integrating and aligning these operations within TOMRA. This process has progressed very well, and we felt that we were now in a good position to take the step we are making now. Our focus now will be on executing the integration of Compac and ensuring that this excellent organization continues to develop positively.