March Networks, a Canadian-based provider of IP video solutions, announced Friday that it has agreed to be acquired by Infinova.
According to a statement, Infinova will acquire all of the issued and outstanding common shares of March Networks for CA$5 per share in cash, which totals approximately CA$90.1 million.
The deal must still be approved by the shareholders of March Networks, as well as Infinova’s shareholders in China. Though they are majority owned by U.S. shareholders, Infinova raised $300 million earlier this year through an initial public offering on the Shenzhen Stock Exchange. The deal is also subject to approval by in regulatory agencies in Canada and the Ontario court.
March Networks’ said that its board of directors has already unanimously determined, based upon the recommendation of a special committee, as well as financial and legal advisors, that the deal is in the best interest of the company.
"The combined companies create one of the 10 largest global players in the video surveillance industry and is well-positioned for the expected industry consolidation over the next five years. Infinova offers March Networks a broader geographic footprint, access to the world's fastest growing market and a complementary fit with our respective product lines. This deal is consistent with our strategy to accelerate growth and expand in the Asian market," March Networks President and CEO Peter Strom explained in the statement.
According to Stephan G. Cannellos, Infinova’s vice president of strategic business development, March Networks will retain its brand identity and become an independent subsidiary of Infinova.
"The first point is one of the very important ones and that is the customer facing aspects of the businesses… and our intention is to keep those separate and distinct," he said.
Cannellos added that the focus of the companies currently is not how best to integrate March Networks into Infinova, but rather how they can leverage each others products and bring surveillance solutions to the market faster. In addition, Cannellos said that there is very little overlap in the products and markets that the companies serve, which is another reason they don’t intend to combine the brands.
"There hasn’t been a whole lot of success with doing that in the past in this industry so I think keeping the brands separate and unique in the areas they do well in is the number one focus," he explained.
Though both companies offer network video solutions, the acquisition of March Networks, which is well-known for its Command enterprise video management system, should bolster Infinova’s position in the IP video space. It would also make the combined company one of the leading providers of DVRs. In July, IMS Research ranked March Networks as the top supplier of enterprise DVRs in the Americas.
Infinova, which is predominantly known for its analog and hybrid products, also makes a variety of other video surveillance components, including fiber optic data transmission products, control room equipment such as matrix switches and video system control keyboards, recording equipment and a number of specialty products.
According to Gary Wong, senior research analyst, video surveillance and security services at UK-based IMS Research, the merger of the two companies would place them within the top 10 suppliers of video surveillance equipment based on figures in the research firm’s most recent global CCTV study. Wong said the combination of the companies will create several synergies particularly in the vertical markets and geographic regions that they serve.
"The vast majority of March Network’s revenue is generated from the Americas and EMEA markets. By comparison, its current presence in Asia is relatively limited," Wong said. "Conversely, Infinova is well established in Asia (predominantly China), but its current presence outside of Asia is relatively low. The combined company could enable March Networks for gain traction in Asia and also allow Infinova to gain recognition outside of its domestic market."
While March Networks is strong in the banking and retail sectors, Wong said that Infinova is stronger in industrial markets and that the combination of the two companies will result in a "broader vertical offering." However, Wong said that it would be unlikely that any of these synergies would push it into the top five providers of CCTV equipment globally in 2012. In addition, Wong believes that video surveillance market will continue to consolidate.