Avigilon soon may no longer be an independent company, but Avigilon's CEO is determined to control his own destiny.
After 2 years of punishing stock price falls and rapid management turnover, a weakened Avigilon has now implemented a plan to get the best out of any takeover or buyout.
In this note, we look what this means for Avigilon's current situation, the outlook for a sale and parallels to previous industry poison pills.
Poison **** / ***********'* ******
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Not *** ************ *** ****
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Bad **** *** ** **** **********
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Killed ****** ******
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Price *** ********
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Paying *** '****'
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Parallel - ***** ********
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Takeover / ******** *** ********?
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Hmmm. I wonder what Manufacturer has a boat load of cash to spend, and could really use the built in customer base Avigilon would give them in the mid to high end? Someone from Mainland China maybe?
Some disclosure - used to work there, now for a competitor.
I don't think either of the big 2 are very likely, but I suspect Dahua would make more sense, since they are increasingly far behind in the US yet have a market capitalization of over $5 billion and, therefore, are big enough to justify it.
Perhaps Avigilon could get Dahua and Hikvision into a bidding war!
Considering that Hik is the biggest camera manufacturer in the world, and to my knowledge all their IP cameras come with at least some analytics, their AV/OV license fee at some point becomes more than a rounding error.
If the price was right, elimination of that surcharge would be an added incentive to acquire.
Possibly even greater reason would be that Dahua, AFAIK, has no agreement with AV/OV.
Ouch!
Depends what Hikvision agreed to pay OV for analytics. But looking at the money OV made on patents (disclosed here), Hikvision is evidently not paying that much, considering they are selling millions of cameras but OV / Avigilon has not made that much money.
Maybe not a deal maker, but just a deal sweetner.
And a spoon full of sugar helps the medicine poison pill go down.
Do not think it can be a Hik or Dahua. Maybe it can be Sony with the idea to push their imagers and give a new life for their video surveillance business.
My guess is that Sony will be out of the surveillance business in the next few years. I don't think that they will invest anything significant in this business.
Just my own personal speculation.
It won't be Hik or Dahua or Sony or Canon or FLIR or any of the other name-brands in the security market.
The security market is now very rapidly evolving, and colliding with the IoT movement and hardware-focused mini startups. Much like the presidential primaries, or a game of kick-ball, all the candidates are in the open, all the teams have picked their major players. Yeah, there's a few stragglers out there that might still get picked up or blended into something larger. Companies like ISONAS are a good example here, they have a strong product, it's a bit niche, and they'd benefit from a better brand and larger sales force. But, we're unlikely to see more acquisitions on the scale of what it would take to buy Avigilon from existing players.
Avigilon will get bought by some name-brand, domestic or international, that wants to take their "expertise and business acumen" and make a strong play in the security market. Cisco is probably the top of my list. Historically Cisco has expanded their product portfolio by purchasing fully-formed companies and products, dropping ios (the other ios) on them, and putting a green bezel on the front. They've already tried to do this in the security market, but I think the products they got didn't live up to the "fully formed" part. Avigilon would give them a turn-key play with a lot of the kinds of things that Cisco would like (analytics! 30MP cameras!).
Dell could be a candidate, Avigilon is already a huge Dell OEMer, and Dell has been sniffing around other businesses for a while. I don't think this would be a successful merger, but on a slide deck you could probably make it seem like the best thing in the world.
Microsoft is another company that has been dabbling in different sectors for a long time, and under their new leadership they've been trying to expand their reach into more devices. Imagine ACC Lite as a core component of every Windows 11 platform, already installed, just add a camera or two to your network. You could drive sales up 5x overnight. MS has also been dabbling in more of their own direct hardware manufacturing, and Avigilon has two very nice state-of-the-art facilities in North America.
The other angle is the Private Equity groups, buy the company, squeeze out the overhead, silk-screen the brand on as much stuff as possible. Drive the stock up 8x over a couple of years and then dump it off on some unsuspecting company wanting to break or diversify into security at the time.
All this of course assuming that Avigilon actually fears or intends to get bought. This might also just be the company reassuring investors that if something were to happen they won't be left empty-handed. A bit of insurance in a sense.
Imagine ACC Lite as a core component of every Windows 11 platform...
Related: Why Doesnt Microsoft Have A VMS?
Psst...Hanwha...over here. Wanna buy a VMS? You can call it SamsTechwIlon....