FLIR buys Lorex for $59 million
WILSONVILLE, Ore.—With a plan to make thermal technology ubiquitous in enterprise and consumer-grade cameras, FLIR Systems on Oct. 25 agreed to pay $59 million to acquire Lorex Technology, a Toronto-based video surveillance provider.
“We believe as the cost comes down, the value proposition offered by thermal technology is something that every security camera owner will be interested in,” Andy Teich, president of FLIR’s commercial systems division, told Security Systems News.
Lorex sells products under two brand names: Digimerge, enterprise-grade video products sold through the security channel; and Lorex, video products sold through retail outlets for small businesses and homeowners.
“Today, FLIR sells tens of thousands of cameras into the security market. Lorex/Digimerge is selling an order of magnitude higher than that, north of 500,000 per year,” Teich said. “They bring a platform for deployment of a lot more cameras.”
FLIR manufactures sensing products with a focus on thermal technology. Teich’s division accounts for approximately $800 million of the company’s $1.5 billion in revenue.
FLIR’s thermal cameras, which used to sell for $25,000 to $35,000 apiece, have come down a lot in price. Models are now available for $2,000 and are increasingly common in commercial and high-end residential applications.
“Granted, $2,000 is still expensive for the average homeowner,” Teich conceded. “We are engaged in high-level investment to push the cost down much further.”
The strategy is to integrate thermal technology into the Digimerge products first. Lorex engineers will begin working with FLIR engineers as soon as the deal closes. Teich believes that new products will be ready to show at ASIS 2013.
Digimerge has “a strong brand and distribution capabilities” that, FLIR believes, will be much stronger with thermal technology.
Lorex distributes its consumer products through a “robust e-commerce and retail channel, and that’s a space that FLIR [is not involved in.],” Teich said. However, “as the cost of thermal cameras comes down, that’s a space we’re keenly interested in. … We believe e-commerce and retail will become an important channel to the market.”
Teich predicts cameras of the future will all be IP-based, have video analytics and also have thermal technology. “The three play well together in a 24/7 way. The reason is that most of the [security incidents] happen at night and right now visual cameras and visual cameras with infrared illumination have problems at night,” he said.
“So much of security focuses on connectivity and analytics, yet they fail to deliver on true 24/7 operability, and that’s because of the [lack of a thermal] sensor.”
The deal is expected to close before the end of the year. The directors of FLIR and Lorex have approved the deal and recommended shareholder approval.
Imperial Capital advised Lorex on the deal. “We were privileged to work with management team at Lorex and think the resulting combination was very beneficial for shareholders as well as the future development of Lorex,” said Michael McManus, a managing director at Imperial Capital, who led the transaction.
“We think the combination of world-leading technology FLIR brings to the table combined with Lorex's design, sourcing and marketing capabilities will make a formidable competitor in the commercial and DIY channels,” he added.