Integration News
March Networks agrees to takeover by Infinova in deal valued at $90M

Under terms of the arrangement, the Ottawa-based company would be  acquired by Infinova (Canada) Ltd. and Shenzhen Infinova Ltd., a  company listed on the Shenzhen Stock Exchange, for C$5 per share.

Stock in March Networks, which has just over 18 million shares outstanding, closed up 19 cents, or four per cent, at $4.89 on Thursday.

Shenzhen Infinova is majority owned by U.S. shareholders and has its U.S. headquarters in Monmouth Junction, N.J.

March Networks president and CEO Peter Strom said the transaction will create one of the 10 largest global players in the video surveillance industry, and positions it for an expected consolidation of the industry over the next five years.

“Infinova offers March Networks a broader geographic footprint, access to the world’s fastest growing market and a complementary fit with our respective product lines,” said Strom.

Infinova chairman Jeffrey Liu said March Networks had established itself as “one of the leading and most innovative players in the video (surveillance) industry and Infinova is proud to combine forces to take the company to the next level.”

“The acquisition provides scale in all critical markets, as well as access to March Network’s proven and innovative IP technology,” he added.

March will continue to operate independently from its Ottawa headquarters, maintain its name and brands and deliver on all of its commitments to customers, while taking full advantage of Infinova’s manufacturing expertise and R&D scale, Liu said.

Under an agreement between the two sides, directors and senior officers of the company holding some 22 per cent of March Network shares have agree to support the takeover, which required the approval of at least two thirds of shareholders as well as other approvals.

The arrangement also gives Infinova the right to match any superior proposal as well as the payment of a C$1.4-million termination fee by March Networks or a C$1.4-million breakup fee by Infinova if the arrangement is not completed in certain circumstances.

Infinova said it would finance the acquisition, expected to be completed in the fourth quarter of fiscal 2012, from available cash.

The takeover announcement came as March Networks cited “normal” quarterly volatility as well as ongoing global economic woes for posting a loss in its latest period.

The company, which reports in U.S. dollars, said its net loss was US$2.3 million or 13 cents per share in its fiscal 2012 second quarter, compared with a profit of US$1.2 million or seven cents per share a year earlier.

Revenue was US$21.9 million for the three months ended Oct. 31, down from US$27.5 million.

“The company believes that delays in order intake and revenue declines in the first half of fiscal 2012 were attributable to normal quarterly revenue volatility and the negative impact of the ongoing global macro-economic situation, particularly in the banking sector,” Strom said.

“We believe our results will improve in the second half of fiscal 2012 based on improved revenue visibility, including the impact of $16 million in orders from a large retail customer that we announced on November 8, 2011.”