Flir to add Cedip for Euro presence

Thursday, November 1, 2007

PARIS--FLIR Systems, the Oregon-based thermal imaging specialist, has acquired a controlling stake in Cedip Infrared Systems, a provider of infrared cameras and stabilized gimbaled systems, based in suburban Paris. Under the terms of the deal, controlling shareholders in Cedip have agreed to sell, and Flir has agreed to buy, shares representing 67.8 percent of the share capital of Cedip, on a fully diluted basis, for a cash consideration of EUR 19 per share, or a total of EUR 41.4 million.
Following this initial purchase arrangement, Flir will launch a mandatory standing market offer in France pursuant to which it will undertake to buy Cedip's remaining shares at the same price. If, after the standing market offer, which should take place no later than end January, 2008, FLIR owns at least 95 percent of the share capital and voting rights of Cedip, the price per share to be paid to all shareholders of Cedip will be increased by an additional EUR 0.50 per share. Flir intends to delist Cedip shares from France's Alternext market at the end of the standing market offer. If all outstanding shares are purchased by FLIR, the total consideration paid will amount to EUR 62.7 million.
The deal is subject to a number of closing conditions, including authorization by the French minister of finance and economy.
Andrew Teich, president of Flir's Commercial Vision Systems division, called the Cedip buy a continuation of its acquisition strategy, which has seen Flir buy Agema in 1997, Inframetrics in 1999, and Indigo in 2004. "Cedip has a strong European presence," Teich reasoned, especially in its home country, which Flir sees as the third biggest European market, behind the UK and Germany, "and we've struggled to get a presence there."
Established in 1989, Cedip makes cooled mid- and long-wave infrared cameras for the science and security markets as well as high performance gimbals for a variety of airborne commercial and government applications. The firm posted revenues of EUR 18.2 million in fiscal year 2006 and operating income of EUR 3.1 million.
Teich said the Cedip brand will be phased out. "We've proven that we integrate companies well when we acquire them," he said. "They've all been highly accretive to the shareholders, and we've done a very good job of rationalizing product lines, with very low turnover and very high customer retention."
The Commercial Vision Systems division, launched a year ago, is the smallest of Flir's three divisions, but is growing faster than the other two: Government Systems and Thermography, which together accounted for roughly $700 million of Flir's $750 million in 2006 revenue.
Teich predicted Flir would hit $1 billion in revenue next year.