Avigilon Buyout Potential Analyzed
Author: John Honovich, Published on Sep 08, 2015Login to read this IPVM report.
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Comments (28)
Undisclosed Manufacturer #1
I think Pelco or Cisco would be a better buyer since they are up market and better aligned with Avigilon type customers.
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Undisclosed #2
A lower stock price makes a deal more likely than a higher one.
For example, if it crashes to $6 a share, offer comes in at $12...
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Undisclosed Integrator #3
Don't Avigilon execs have a history of being "greedy" and wanting to cash out early, making a sale more likley? [sic]
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Tim Campbell
For a publicly traded company, though, a buyout isn't a decision for only the CEO to make. About a million or more shares of Avigilon regularly trade each day, representing about 2% of the outstanding shares. If another company really feels Avigilon is undervalued, it could slowly build up a decent minority stake in the public market before it even makes a move. For example, if the other company could get, say, 15% of Avigilon, (about 7 million shares) then it would only need to make an offer on another 35%. Once it has a majority stake, it can appoint the board, etc, and the rest of the takeover falls into place.
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Tim Campbell
John, I agree with your assessment of what Avigilon management sees as the underlying value of the company long-term, and undoubtedly it is a lot higher than its current capitalization.
Today's P/E of 15 seems quite low for the company, unless one assumes that it is going to fall apart. Even if we give a fair P/E of, say, 25 for a growing tech-style company, that moves it into the $20 range. And then a premium for a takeover ... and a higher premium if its hostile ... could be in the $30+ range, no?
Whether a buyer would offer $1 billion to $1.5 billion for the company is another question. If Avigilon can execute on its growth strategy, then it would definitely be worth it. But you would have to feel that the current "bumps" are temporary and solvable.
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Undisclosed #4
Honeywell?
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Undisclosed #2
The most cut-throat deal of all time?
Hik buys Avigilon.
Hik then demands Dahua license the OV patents. As John pointed out they are one of the remaining camera mega-mfrs who have not come to an agreement regarding the OV intellectual property.
Impact: One high-end competitor would eliminated completely, Avigilon.
On the low-end, Dahua, could be affected by licensing more than an a Axis or Genetec would be, because even a modest per camera fee could impact their ultra-low pricing.
I'm not saying I want this to happen, but it does give Hik a lever against Dahua/Axis/Uniview.
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John Honovich
Update: In the past 16 months, it has become much more likely that Avigilon gets bought out. 2016 was another tough year for the stock with it going down to ~$8 but now back up to $14, though still far off their 2014 high.
There's a lot of credible chatter about an Avigilon acquisition happening now.
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Attila Szucs
If I could get a buck how many times I heard (since Schneider bought Pelco) that it is prepared for a buyout... I would be a rich person. :D
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