Should Avigilon Accept A Buyout Offer From Dahua Or Hikvision?
Let's say hypothetically that one of these 2 companies made the top bid for buying out Avigilon.
Should Avigilon take it? Discuss.
Related / Background: Who Will Buy Out Avigilon?
Some potential concerns - Hikvision's Chinese government ownership could make a deal politically risky. Dahua's organizational issues could be problematic / negative towards existing / retained Avigilon management.
Are those big enough issues? Any other concerns?
I am asking about from the position of Avigilon but if you think Dahua or Hikvision should not buy Avigilon, feel free to comment on that element as well.
I am going to say NO and NO.
What would Avigilon bring to either of their tables?
In my opinion,
In Eyes of HIK/Dahua (or anybody else) only value Avigilon has
it's source code for ACC and source code for camera firmware with Analytics
Hardware has very little value
In my opinion, if this were to happen Hikvision and Dahua would gain in many ways - including gaining additional market share, access to a broader product line, large footprint in North American Markets, etc etc. But Avigilon apart from cashing out would not gain much. It would be very concerning for existing Avigilon employees from the sense of retaining their jobs as well as maintaining their pay scales and style of work.
But Avigilon apart from cashing out would not gain much. It would be very concerning for existing Avigilon employees from the sense of retaining their jobs as well as maintaining their pay scales and style of work.It will largely depend on terms of the deal how Avigilon will protect their employees and make sure the deal does not harm them.
There is no hiding from the Chinese connection in today's environment. To purchase a N. America brand in hopes to gain local access is a fantasy.
If Hikvision or Dahua were going to purchase Avigilon, they should have done so before their own brands were so 'recognized'.
Avigilon should really be purchased by a private equity company. They already have a diverse product portfolio (but could still fill many gaps), a worldwide reach, and manufacturing capacity. There is a lot of potential, if a few other things can be restructured.
While it does make sense at the same time there are too many conflicts here. the question would be who would buy whom naturally this would mean UTC buying Avigilon and not Lenel buying Avigilion or Avigilon buying Lenel, which seems very unlikely as there is very little value Lenel can add to Avigilon in terms of product and technology value considering they already have their own Acces Control product as a result of their acquisition of Red Cloud that is based on Mercury controllers and often competes with Lenel and they are know to take over a lot of Lenel installs.
The other important aspect here is although Lenel is a proven Access Control Platform but its video surveillance strategy is very complex and weak with integrations from major VMS providers like Milestone, Genetec, etc. Thier own video management offerings include OnGuard Video and Prisim Enterprise Class VMS. The big benefit to Lenel would be Avigilon's products and technology added to their portfolio would make them a much stronger Video Surveillance player
It's really a shame Avigilon did not merge with RS2 for access control. We sold red cloud and sell Avignon now, but it should really just be scrapped for a mature ACS rather than reinventing the wheel.
I think the problem UTC will have is that they are making good money now rebranding hikvision product as interlogix.. So, why throw good money after bad by investing more heavily in the camera market on the manufacturing side especially at a crazy PE valuation. It is entirely possible that someone completely outside of the industry like a networking / IOT manufacturer will buyout Avigilon (cisco etc.)
It would bring Hikvision a Casino ready VMS. I for one, would love it! Their cameras are already very good and having a good VMS would make them a real player in the Casino market.
This would be the single biggest corporate culture clash ever. Hikvision/Dahua push low cost boxes any which way they can: OEM, direct sales, distribution, Amazon, etc. Avigilon sells direct to selected, pre-qualified dealers and detests distribution. All of them are setup to support their chosen model which directly clashes with the other.
No matter who were to purchase whom I could see a flood of personnel jumping ship.
I'd rather see Avigilon get picked up by Hanwha, but I'm a Hanwha fanboy.
If Avigilon starts to get hit with slowing sales numbers I wouldn't be surprised to see them grab an easy way out, but I don't see that happening for a few years. With HIKVision starting to build out their expansive engineering team and the new huge facility I think it would be a mistake for them to try any large acquisitions until those new aspects are integrated in fully to their existing team (maybe a small acquisition here or there to fill in technology gaps as they build out their VMS, but nothing close to the size of an Avigilon deal).
Not to say that they won't, they do have an endless printing press of money so they may see it as a free gamble, but to this point they've seen smart with acquisitions and buying Avigilon seems too desperate for them right now
Update: China M&A of international companies was down 77% in Q1, from a volume of ~$91 billion USD in Q1 2016 to ~$21 billion USD in Q1 2017.
As the Chinese government's own publication cited:
Noting an "irrational tendency" in outbound investment, Chinese authorities have set stricter rules and advised companies to make their investment decisions more carefully.
While it is certainly possible for Dahua or Hikvision to do an acquisition, it will be harder to get it approved this year than last.
Chinese government is all I need to make a decision. My $ won't go that direction.
Hanwha should buy Avigilon for the software, analytics and customer base.
They should accept any reasonable buyout offer, if only to get different leadership and a strategy to move forward other than just 'sell more'.
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