Costar Bid to Acquire Arecont Vision Approved
Arecont Vision initiated proceedings to sell its assets under Chapter 11 bankruptcy protection May 14 and has achieved its goal of moving through the process quickly, the company states.
GLENDALE, Calif. — Arecont Vision, a provider of IP-based megapixel camera and video surveillance solutions, will be acquired by Costar Technologies (OTC: CSTI) following approval by the United States Bankruptcy Court for the District of Delaware. The sale is expected to close July 13, according to an announcement.
The purchase price is expected to be approximately $12 million in cash net of a net working capital adjustment, subject to certain post-closing adjustments as set forth in the definitive agreement.
Arecont Vision initiated proceedings under Chapter 11 bankruptcy protection May 14 and has achieved its goal of moving through the process quickly, the company states.
Arecont Vision, based here, initially executed a $10 million asset purchase agreement with an affiliate of Turnspire Capital Partners, under which Turnspire would acquire substantially all of the company’s assets and be reorganized under Chapter 11 bankruptcy.
The company later received a more lucrative offer from Costar Technologies. The bankruptcy court scheduled an auction for July 9 and a hearing July 10 to consider approval of the winning bid and confirm the results of the auction for Arecont’s assets. Arecont notified the two suitors that Costar’s offer was the best qualified bid and constituted the baseline bid for purposes of the auction.
After the closing of the sale, upon emergence the assets formerly operated by Arecont Vision will begin operating as Arecont Vision Costar and be part of Costar, a U.S.-based corporation that designs, develops, manufactures and distributes a full range of products for the video surveillance and machine vision markets.
“Costar’s family of companies, composed of CohuHD Costar, Costar Video Systems, Innotech and IVS Imaging, is a great strategic fit for Arecont Vision providing synergies that can be leveraged to grow our business in new market verticals and product areas,” states Raul Calderon, COO and general manager, Arecont Vision. “Costar provides resources that will enable Arecont Vision to continue to innovate and lead the market. I am proud of our team, and we are grateful for the support, patience, and continued commitment of our employees, suppliers and customers, as we look forward to becoming a new Costar business.”
The company states it has been successfully operating under normal business conditions throughout the bankruptcy process and did not experience any layoffs. Arecont continued with the introduction of its new Contera IP cameras, video management system, web services and Cloud-managed recorders.
Under Costar’s leadership, substantially all of Arecont’s employees will be hired by Costar, customer programs and services will continue, and investments will be made into the development of new, industry-leading products, according to the announcement.
“The acquisition of the assets of Arecont Vision expands Costar Technologies’ video surveillance platform by strengthening our product line,” says James Pritchett, Costar president and CEO. “It supports Costar’s strategy to become a leader in the video surveillance industry, transitioning from a value-added OEM product company to a manufacturing based and design company. Along with our other recent acquisitions, the Arecont acquisition increases our manufacturing and design from approximately 50% to 75% of our revenue.”
The acquisition, which is structured as an asset purchase, is subject to customary closing conditions. Costar is financing the transaction with proceeds from a new credit facility with UMB Bank.
After integration costs, the acquisition is expected to be neutral to earnings per share in 2018 and mildly accretive in 2019, due to operating synergies and improved efficiencies, according to Costar. Full earnings benefits are expected to be realized in 2020.
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