Is this an honest question? I cannot imagine anyone who understands the channel or business in general would think this could even be viable for ANY camera vendor to acquire ADI or any other distributor that relies on revenues from multiple camera manufacturers.
But ok, I'll play along, so let's look:
ADI is what, $1.2B in revenue.. shall we estimate that 40% of that is from cameras alone (maybe higher, maybe lower, but in the ball park) so $1.2B x 40% = $480 million.. let's call it $500m. How much is Hik's portion of that? $100m? Probably high, but close, so let's use that.
So they come up with an ADI valuation using FCF or a multiple (EBITDA, Revenue.. pick/ don't care). Then they pay a premium on top.. usually 30-50% to avg stock price or value if private or not broken out like it is w/ ADI.
Acquisition is executed. Next thing that happens? Larry Newman, Bosch, Samsung, Arecont and the rest of the prominent brands cancel their contracts.
The $500m in camera revenue drops 80% to essentially ~$100m. Total revenues drop ($400m) roughly 25% and the acquisition becomes extremely dilutive. Somebody and Hik gets fired.. or worse. So no- doesn't really fit.
Does buying a VMS make more sense - You bet. The best one they can find.
And another thing: I'm new to the blog so perhaps I've missed something.. but what is all of this "hate chinese" rhetoric? Much seems directed at Hik. Why?
Is it cause their cameras aren't made in USA? If so, so Sweden, Germany and Japan is ok (and most are still made in China anyway..) Arecont is USA! Is it because Lenovo bought IBM pc's, laptops and server business? Do none of you drive Japanese cars..? or
Look- I'm a red blooded American and I'm fully against manufacturing businesses moving out of the US like companies like Carrier.. etc.. but that's not what's happening here. Is this just part of the natural bias cycle (Irish keep off the grass, Japanese..) etc..?
If it's just your personal opinion that you don't like Chinese owned companies- then that's ok and no need to explain/ I have friends that feel that way and I'm not challenging that. But if there's a business reason, please share.