Costar and Sielox to merge
NEW YORK--The publicly traded holding companies that own video surveillance manufacturer Costar Video Systems and access control manufacturer Sielox announced Jan. 5 a definitive merger agreement. Dynabazaar, owner of Costar as of June of 2006, will grant 3.65 shares of common stock to each shareholder of LQ, owner of Sielox as of December of 2005. This transaction represents about $3.63 million, which is roughly LQ's market cap, assuming Dynabazaar's Jan. 5 trading price of $.31 on the OTC Bulletin Board. Dynabazaar reported $3.6 million in revenue and $193,000 in net income for the quarter ending Sept. 30, 2006. LQ reported $1.65 million in revenue and $592,000 in losses for the same period.
Sebastian (Sam) Cassetta, currently the chief executive officer of both companies, will become the president and chief executive of the new combined company, which is expected to trade under Dynabazaar's FAIM symbol on the OTC Bulletin Board, assuming stockholders approve the deal. Cassetta has been president of Burns and Roe Securacom, a commercial integrator, and headed up European operations for Brink's, where he was a director and vice president. Both boards of directors have already approved the agreement. The companies expect to complete the merger over the next six months.
"We're a small company and growing very rapidly and can benefit extremely from the Sielox relationship, with their 25 years of sales history," said Jim Pritchett, president of Costar, who noted that the companies have already been working together for some time, following an SEC-filed strategic alliance agreement on Sept. 21, 2006. Pritchett is a former president of Ultrak, the CCTV portion of which was sold to Honeywell in 2002, and said that Costar may have a 15-year-old brand, "and actually sold Pelco their zoom lenses 15 years ago," but the company has only been operating in the professional security space since 2001.
Currently, Costar sits at about 15 employees. Pritchett wouldn't say how many authorized dealers and integrators the company worked with, but noted "we have a pretty strong following and distribution in the south, and not so much in the north, and that comes back to just not having enough people to create a demand." He said Sielox would both provide an increased sales force and a trusted brand with which Costar would benefit by association.
Pritchett said there is "probably a pending name change in the future," but he couldn't speculate on which brands and company names would remain. Sielox's brand returned when LQ purchased the access control manufacturer from Checkpoint Systems, which purchased Sielox in 1986.