Opgal's Acquisition of Vumii Examined

In October 2010, Vumii announced that it was acquired by Opgal [link no longer available]. In this note, we examine the rationale, positioning and significance of the announcement. For background, readers should review our 2009 profile of Vumii's products and pricing.

Opgal is an Israel based specialist in thermal imaging. While not well known in the Americas, Opgal is a significant thermal supplier in EMEA. Opgal offers a broad range of cooled [link no longer available] and uncooled thermal cameras both under their direct brand and for OEMs. Founded in 1983, Opgal is a privately held company that has approximately 150 employees. Its major shareholders include Israeli defense contractors Elbit Systems and Rafael.

Vumii is a US based specialist in continuous-wave laser and focused beam LED active illumination vision systems. They are typically used in outdoor long-range video assessment that seek greater details than thermal can complete. Vumii's cameras/systems start at approximately $30,000 MSRP and are therefore designed for higher end critical infrastructure/military applications. Vumii reports 12 current employees and $12.5 Million total angel funding over the past 6 years.

While financial details between the two private companies were not disclosed, we suspect the acquisition price was modest relative to the total amount invested into Vumii. Our basis for this speculation is (1) the relative small team of Vumii implies revenue in the single digit millions and (2) Opgal's relatively modest size itself (likely total revenue in the low to medium tens of millions.

On the other hand, we do see signs that the combination may be a good strategic fit.

• Vumii and Opgal's geographic market positioning complements each other - Vumii in the US, Opgal in EMEA
• No overlap between the company's product lines. Vumii provides Opgal with a relatively unique technology for Opgal's current market base that Opgal did not previously possess
• Opgal has R&D and manufacturing facilities that Opgal can tap into. Previously, Vumii used contract manufacturing. Opgal's R&D team can help develop newer products.

Vumii's management team will remain with Opgal and the Atlanta office will be used as a primary US office.