Mitsubishi Electric Signs Agreement to Wholly Acquire Nozomi Networks

Mitsubishi Electric Corporation announced that it has entered into an agreement to acquire all shares of Nozomi Networks Inc., a U.S.-based developer and distributor of operational technology (OT) security solutions. Nozomi Networks serves a diverse range of customers, primarily in social infrastructure sectors such as power and railways, as well as in the manufacturing industry. This acquisition pertains to shares not already owned by Mitsubishi Electric.

The transaction is expected to be completed in 2025, subject to the approval of the necessary regulatory authorities and the fulfillment of other customary conditions.

Upon completion of the transaction, Nozomi Networks will become a wholly owned subsidiary of Mitsubishi Electric.

Rationale for the Transaction
In response to the increasing importance of OT security measures due to the IoT and digital transformation (DX) of manufacturing sites and social infrastructure, Mitsubishi Electric has been dedicated to developing a “One-Stop OT Security Solution” that protects on-site equipment and systems from cyberattacks. This initiative leverages its extensive IT security expertise gained across various sectors, including the financial industry, and aims to promote DX among multiple industries.

Nozomi Networks is a global leader in providing OT security solutions, boasting a high compound annual growth rate (CAGR) of 33% and a strong revenue base with a gross profit margin exceeding 70%. Through this announcement of the acquisition of Nozomi Networks, and its establishment as a subsidiary company, Mitsubishi Electric will strengthen its OT security business. This follows the earlier collaboration agreement with Nozomi Networks in 2024. By integrating solutions in the OT domain, where there are established strengths, with Nozomi’s world-class cutting-edge OT security technology and diverse customer base, Mitsubishi Electric aims to fundamentally enhance its security business.

Furthermore, by leveraging data and insights obtained through Nozomi’s solutions for intrusion detection and visualization, and by working responsibly with both companies’ diverse installed bases, new services can be co-created with customers. This collaboration will accelerate the growth of Mitsubishi Electric’s SerendieTM digital platform, and its related businesses, while providing services and value that safely and reliably support future customers’ DX.

Transaction Method
The transaction will be executed through a “reverse triangular merger”, whereby Nirvana Merger Sub, Inc. (SPC), a wholly owned subsidiary of Mitsubishi Electric established for the purpose of this transaction as a special purpose vehicle in the United States, will merge with Nozomi Networks.

In connection with the merger Mitsubishi Electric will pay or cause to be paid cash as consideration to the shareholders and holders of equity-linked securities in Nozomi Networks, and all issued and outstanding shares, and equity-linked securities of Nozomi Networks will be cancelled and converted into the right to receive the merger consideration, except that the shares held currently by Mitsubishi Electric will not be entitled to receive the merger consideration. All shares of SPC held by Mitsubishi Electric will be converted into common shares of Nozomi Networks, the surviving entity. As a result, Mitsubishi Electric will acquire all the issued shares of Nozomi Networks, and Nozomi Networks will become a wholly owned subsidiary of Mitsubishi Electric.

The consummation of this transaction is subject to the approval of the necessary regulatory authorities, as well as the fulfillment of other customary conditions required for such transactions.

* Ownership (%) held by Mitsubishi Electric is based on diluted basis.

 

“Serendie” is a pending trademark of Mitsubishi Electric Corporation.

Originally (initially) released in Japanese and English