CAE acquires U.K. copmany as part of move into mining sector
By The Canadian Press
April 19, 2010, Montreal - CAE Inc. has landed another attempt to diversify its flight simulation and training business by following up its entry into health care by extending its expertise to the mining sector.
By The Canadian Press
The Montreal-based company has spent $25 million to acquire The Datamine Group, a U.K.-based global supplier of software and services for the mining sector.
"When we looked at this market and we looked at what people were using, we see a lot of opportunity to improve what they use and how they train and so both of these pieces together got us excited about Datamine,'' said Nick Leontidis, CAE's executive vice-president of strategy and business development.
CAE primarily supplies simulation equipment and training services for commercial aviation and military markets.
But the company is making a strategic diversification into three other areas — health care, mining and energy — where CAE believes its expertise in modelling and simulation can be applied.
Datamine sells software that helps mining companies to evaluate ore deposits and efficiently extract the underground material.
CAE plans to add simulation to these tools to enhance Datamine's offer.
Simulators would also be sold to help train thousands of mine workers on the use of heavy equipment that costs upwards of $5 million a piece.
The devices would be similar to the fixed-base aircraft simulators that sell for under $1 million.
"Instead of a cockpit of an airplane, you have a cab of a piece of equipment, you have a visual system, you have a motions system,'' Leontidis said in an interview from China.
It would allow miners to train like pilots in a realistic environment where conditions can easily be modified.
Mining companies could do their own training or outsource it to Datamine.
There are three other companies that provide simulation-based mining services.
CAE's first push into the mining sector is the company's largest to date that flows out of its diversification strategy. It has taken a few smaller steps in health-care with the purchase of two ultrasound training companies earlier this year.
The acquisitions follow a November agreement with Titan Medical for the development of a clinical-grade robotic surgery platform.
Tackling the energy business could be the next frontier added in the next 12 months.
"We think that these are the three areas that will give us the highest likelihood of success,'' added Leontidis.
CAE is in the infancy of its diversification strategy that it hopes will have a long-term, material benefit to its sales and profits.