Vicon announced on Monday that it has entered into an agreement to merge with IQinVision.
“The more we talked it through, the more both parties believed that it was a great fit for the two. It rounds out a very comprehensive video profile,” says Ken Darby, Chairman & CEO, Vicon.
Video surveillance solutions manufacturers Vicon and IQinVision announced in April that they have entered into a merger agreement. Under the terms of the agreement, which has been approved by the boards of directors of both companies, Vicon will issue shares of Vicon common stock to IQinVision shareholders in an all-stock merger whereby IQinVision shareholders will own approximately 50 percent of the outstanding common stock of the combined company. After the merger, Vicon will have approximately nine million shares outstanding.
Vicon Chairman and CEO Ken Darby calls the merger a “natural fit” and says they have been in talks for the better part of a year. “The major impetus was the fact that we complement each other so well,” Darby says. “IQinVision is a single-product company — megapixel IP cameras — and has a nice range that is proprietary to them, so they would design the hardware and the firmware. Vicon is a solutions selling company. Our strength is in our video management software and NVR software. We have our own proprietary megapixel robotic dome camera line and we have a range of encoders, DVRs and that sort of thing that are proprietary to Vicon.
“The main thing with us is we had a very limited range in the fixed megapixel area and we were supplementing our limited range with a variety of OEM suppliers,” Darby continues. “We felt that to be a proprietary, integrated solutions business, we needed to have a full complement.”
Additionally, Darby says that there is very little overlap in the companies’ sales channels, as Vicon sells predominantly to integrators, while IQinVision mainly sells to OEMs and distributors. “The merger will provide Vicon’s authorized dealers with a more diverse line of megapixel cameras,” says Vicon Senior Vice President of Sales and Marketing Bret McGowan.
The merger should also help boost IQinVision’s presence in Europe. “(Vicon has) a big sales footprint in Europe, where we’ve been for over 30 years; and IQinVision had a very, very limited exposure to the European marketplace,” Darby says. “The more we talked it through, the more both parties believed that it was a great fit for the two. It rounds out a very comprehensive video profile and, I might add, a proprietary video profile, meaning that we own all of the technology in all the various product areas to go the market with.”
“This is a great fit for IQinVision as we combine with one of the iconic brands in the industry,” IQinVision CEO Charles Chestnutt added in a statement. “Our product offerings are complementary to Vicon’s solutions, and we believe Vicon’s worldwide sales organization will effectively promote the IQeye brand to new markets and accelerate the growth of our sales footprint.”
According to the statement, both Vicon and IQinVision’s product offerings will retain their existing branding, and both companies will continue to sell into and service their existing channels and customers. Darby says that the companies have had some preliminary discussions about how they will integrate their operations, but that the details of how they want to accomplish that will need to be fleshed out in the coming months.
In the meantime, Darby added that one thing that will start almost immediately is that both companies will begin selling their products through each other’s sales channels, probably within the next 60 to 90 days.
“We’ve looked at what we’ve had to do from an engineering point-of-view for compatibility with our VMS and our NVR platform — so that’s the first thing we’ll begin to leverage,” he says.
“The merger will allow the company to continue to focus on a solution-based sales effort, whereby we bring stronger technology to our customers,” McGowan adds.
In the merger, Darby says that IQinVision will become a wholly-owned subsidiary of Vicon. Both Darby and Chestnut will remain in their current positions. “Structurally, the businesses will pretty much stay as they are until perhaps after the merger is completed and we look at more efficient ways that we can setup structures,” Darby explains.
For the twelve months that ended on Dec. 31, 2013, IQinVision and Vicon combined generated $56 million in revenue. Following the merger, the board of directors of the combined company will consist of three directors designated by Vicon and three directors designated by IQinVision. TM Capital Corp. and Imperial Capital acted as financial advisors to Vicon and IQinVision, respectively. The transaction is expected to close in Vicon’s September quarter.
“We think that the opportunity for us to drive their proprietary lineup of products through our channels is great. We will not be in a position where we will be selling a product that someone can perhaps buy someplace else,” Darby says. “Also, in the longer term, it will help us improve our margins across the board in our product offerings as well.”