FLIR Systems on Tuesday announced that it has sold Lorex, its Canada-based security products subsidiary, along with its Toronto-headquartered small and medium-sized (SMB) security products business to China-based video surveillance giant Dahua. According to a statement issued by FLIR, these businesses, whose products are sold globally to both consumers and SMBs through various distribution channels, generated $140 million in revenue in 2017. There are over 100 products involved in the sale of these two businesses, including all Lorex, Digimerge and FLIR visible spectrum SMB products.
Under the terms of the agreement, FLIR will receive approximately $29 million in cash and expects to record a GAAP non-cash charge of $23.6 million related to the divestiture.
FLIR initially acquired Lorex in late 2012 for CAD$59 million as part of an effort to bring thermal imaging technology to a broader customer base.
"It plays into our strategy of not where we are today, but where we are headed," FLIR’s former CEO Andy Teich told SecurityInfoWatch.com in an interview shortly after the acquisition was announced in 2012. "We’ve told our investors for some time and have been executing along the lines of a continual reduction of the costs of thermal imaging technologies with the ultimate goal of providing thermal imaging technology to a very broad base of users at very low cost."
Although a company spokesperson said that FLIR has driven down the cost of ownership of thermal sensors “quite meaningfully,” the company no longer views the consumer segment as strategic for their security business and has instead shifted its focus to the critical infrastructure and enterprise market verticals.
“This divestiture will focus our security business on critical infrastructure and enterprise segments of the broader security market, which are attractive customer bases for our differentiating technologies,” Jim Cannon, President and CEO of FLIR, said in a statement on Tuesday. “As we assessed our position and opportunities in the security and surveillance space, we determined that this business no longer fits our strategy to build intelligent, turn-key security solutions that are based on multiple wavelengths.”
When asked why the Lorex business was sold for less than it was acquired for in 2012, the spokesperson cited the pressures that margin structures are under in the consumer segment as the primary factor. The company added that support for all Lorex and SMB products will immediately shift to Dahua, however; the SMB North American-based sales and marketing team will remain intact.
For its part, Dahua, which had been the primary OEM supplier of video surveillance products to Lorex prior to the acquisition, said that the purchase will enable it to grow its business in the market. In addition, the company said that Lorex along with the FLIR visible imaging team will operate independently as an autonomous business unit.
FLIR-branded SMB products will also continue to be marketed for sale and available for support. Dahua said it plans to expand the SMB North American-based sales and marketing team in the near future to provide enhanced support.
“Lorex brings to Dahua strong relationships with leading North American retailers. These are formidable assets that will complement Dahua’s already impressive strengths and resources,” Dahua said in a statement. “Dahua’s capabilities and substantial resources, combined with Lorex’s experienced small and medium business professional management team position us well to deliver strong growth in the future. The combined resources will enable us to successfully address market opportunities.”
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