The IDIS merger with Costar Technologies this week continues the consolidation trend in the global video surveillance industry – which shows no signs of abating anytime soon.
Last year’s research showed the largest 15 video surveillance equipment and software vendors accounted for 70% of the global market, says the London, U.K.-based tech research firm Omdia.
In this case, IDIS and Costar are global companies that have a strong reliance on their home domestic markets, notes Oliver Philippou, research and analysis manager of physical security technologies for Omdia. IDIS, a South Korean company, has a large OEM business and branded-label business that mainly services the commercial market.
“On the surface this looks like two differing companies coming together to create something greater than the sum of their parts,” Philippou says. “Collectively they have little overlap. Omdia’s initial impression is that this merger offers collaboration opportunities for these brands into each other’s markets.”
The IDIS acquisition does include Arecont Vision, confirmed Costar Technologies Chief Financial Officer Sarah Ryder. It was unclear Friday how the news would affect the presence of each company at next week's ISC West trade show, where both companies have a booth reserved. But Ryder said the companies would "continue to operate independently until the deal closes."
The merger agreement has been unanimously approved by the board of directors for both companies. IDIS will continue using the Costar name, with Costar becoming a wholly owned subsidiary of IDIS.
The present Costar management team and employees are expected to join IDIS following the closing of the acquisition. Scott Switzer will continue in his role as CEO.
IDIS CEO Kim Young-Dal says leveraging Costar's established distribution networks and sales channels in the U.S. “gives a significant boost to IDIS' growth strategy, which is founded on building long-term relationships with systems integrators.” The acquisition means IDIS will diversify its presence in the government sector and intelligent transportation systems, he says.
IDIS is paying $23.2 million, subject to customary purchase price adjustments, which includes $13 million to retire Costar's bank debt and the remainder going to holders of Costar common stock and vested options.and vested options.
