March Networks acquires Trax

Deal targets further push into retail market
Tuesday, August 1, 2006

OTTAWA, Ontario--IP-video manufacturer March Networks at the end of July closed on the acquisition of Trax Retail Solutions, a Scottsdale, Ariz., provider of enterprise software for loss prevention, store operations control and profit optimization solutions in the retail sector. March Networks paid $7.5 million for the company, an initial $5 million in cash, with an option to pay the rest in either stock or cash. There is an earn-out component, as well.
"Traditionally, DVRs and video surveillance have been used for security applications," said Anil Dilawri, March Networks' director of investor and public relations, "but what we're hearing from our enterprise customers is that they're looking for it to go beyond security ... They want it to improve the top line as well as the bottom line, let them know how they can do business a little better."
"The video analytic applications we're developing give our customers a better insight into what's happening in their stores ... and that's a lot of the reason we went forward with the Trax acquisition, to help retailers improve their business."
Phil McDouall, March's retail product marketing director, noted that there is already overlap with March and Trax customers, so the integration of the companies shouldn't be too difficult. Most of Trax's 50 employees will be retained and March expects to keep Trax's Scottsdale location operational.
"One customer in New Zealand already uses both applications," said McDouall, "and the loss prevention manager there has given us some very interesting stats regarding the time it takes to complete an investigation. It used to take 10 days and 10 people, typically, to take an investigation to completion. Now she does most of the investigation, if not all, from her office, completes it in one day, and it typically only involves one other person, the store manager. She can complete 10 times as many investigations."
The list of Trax clients that March finds attractive would include grocery chains such as Albertsons and United Supermarkets.
"We look at retail as a very strategic target market for us," said Dilawri. "Retail is just huge, an environment that is still primarily analog, if not greenfield. We look at this acquisition as allowing us to further differentiate ourselves from the myriad hardware providers."
For fiscal year 2006, March expects Trax to contribute less than five percent of the company's total revenues. USBX served as financial advisor to Trax on the negotiations.