Canon + Axis + Milestone = The New Dominant Player in Video Surveillance Technology
The Board of Directors of Canon Inc. and Axis Communications have announced today that Canon has made a public offer to the shareholders of Axis to transfer all of their shares in Axis to Canon for a consideration of SEK 340 in cash per share in the Company. Axis board of directors have unanimously supported the offer.
The total value of the Offer is approximately SEK 23.6 billion and represents a premium of approximately 49.8 per cent compared to the closing price of SEK 226.9 for the Axis share on Nasdaq Stockholm on 9 February 2015 and an exit multiple based on sales of 4.29 and on EBITDA of 9.71.
Whilst these multiples are at the very top end of the spectrum to pay for a Video Surveillance company Axis is the undisputed world’s leading IP Network camera manufacturer.
Canon has a penchant for Scandinavian video technology having already acquired Milestone Systems A/S of Denmark last year a leading supplier of open platform video management software (VMS).
This combined the strength of Canon’s innovative imaging technology with Milestone’s best in class VMS. But many of the pundits thought it would not benefit either party long term. We can now see that this was the first piece in the jigsaw of building a world class Video Surveillance company to meet the challenge and demands of the Internet of Things (IoT).
With the union of Axis they now get the best in technology, scale and additional software capability.
For the last 2 years the experts have been keen to point out that the Achilles heel of Axis is their inability to produce competitive products for the bottom end of the market and that this has slowed down growth and will continue to suppress sales.
For the time being going down the food chain to smaller buildings where IT Infrastructures are not commonplace and building operators lack the skills to realise the benefits of IP cameras is going to be a hard sell.
However this is a high volume market and a significant proportion of it comes within multiple estates where the IoT can realise benefits; so it looks like a realistic opportunity that can be opened up over the next few years.
Canon’s timing therefore looks pretty good. A short period of decline in growth in IP network cameras to take some of the hype out of the business to be followed by an upsurge in 2/3 years time to meet the challenge of IoT.