7 October 2016—The past week included news of acquisitions in two very different niches in the imaging market.
On 3 October, FLIR Systems, a global developer and manufacturer of thermal-imaging cameras, sensors and other systems, especially for security, threat detection, and industrial process control, announced that it had reached an agreement to acquire Point Grey Research, a Canada-based developer of machine vision cameras, for US$253 million. And on 7 October, Boston Scientific, a leading supplier of medical equipment, commenced a previously announced, US$210 million tender offer for EndoChoice, a U.S.-based company focused on endoscopic imaging systems and other products for the gastrointestinal-medicine market.
FLIR and Point Grey
For FLIR, which is projecting total revenues of more than US$1.6 billion for the current year, the purchase of the privately held Point Grey seems to offer the chance to extend its own capabilities into the industrial-automation and intelligent-systems markets in which Point Grey operates.
Point Grey’s technology consists of advanced visible-imaging cameras targeted to “Industry 4.0”-type undertakings and advanced, “smart” manufacturing systems. FLIR apparently believes that putting its infrared-imaging technology into the mix with Point Grey’s strengths in the visible wavelength band could create a stronger value proposition for both companies in this emerging market.
Leveraging a broader spectrum
FLIR’s president and CEO, Andy Teich, in a press release accompanying the announcement, said that thermal imaging “provides vision systems customers an alternative imaging spectrum that offers a rich, largely untapped layer of information that can be further leveraged.” The company provided some examples—remote temperature measurement, the ability to “see” through smoke and steam, and the ability to track (warm) human bodies in retail settings—that it believes can “extend Point Grey’s product range into new application spaces.”
The deal is expected to take place in the 2016 fourth quarter, and to be accretive to earnings by 2017.
Boston Scientific and EndoChoice
The purchase of the US$75 million EndoChoice by the US$8 billion Boston Scientific seems, at least on the surface, driven by a quest for the same type of new-market inroads. But the story is a bit more complicated, as Boston Scientific already has a large, growing endoscopy business, with 2015 revenues of more than US$1.4 billion and with an 11 percent year-to-year sales gain logged in the 2016 second quarter.
As some in the business press have noted, some of Boston Scientific’s other product lines, such as pacemakers and defibrillators, have seen weaker sales comparisons. Expansion of the company’s operations in the faster-growing endoscopy segment has been one response.
Unclear road for a key EndoChoice product
EndoChoice’s marquis product in the endoscopy market is its “Fuse” product line for colonoscopy practitioners. The Fuse system is tricked out with multiple miniaturized imagers and LEDs in the business end of the instrument, to provide, according to the company, a 330-degree field of view (versus 170 degrees for conventional colonoscopes). EndoChoice says that this “full-spectrum endoscopy” system, in clinical trials reported in Lancet Oncology, missed substantially fewer colon lesions than conventional technology.
Just whether, and how, this flagship EndoChoice technology will actually fold into Boston Scientific’s existing product offerings in endoscopy is unclear, however. The press release accompanying the deal announcement noted that “With respect to the FUSE colonoscope, Boston Scientific intends to evaluate strategic options, and expects to provide further clarity at or around the time of transaction closing.”
The deal, valued at US$8 per EndoChoice share—announced before the U.S. stock market opened on 27 September—compared favorably (to say the least) with previous day’s closing price of $4.22 per share. The offer commenced today and will expire on 4 November. Boston Scientific expects the deal to have no adjusted-earnings-per-share impact next year but believes that it could add to earnings per share in 2018 and beyond.