Canon in Position to Buy Axis for $2.8B

The announcement comes less than a year after the Japanese imaging giant acquired VMS leader Milestone.

TOKYO – In what would be a monumental industry deal, Canon is making a strong push to purchase Axis, the market-share leader in network IP video surveillance cameras and related devices, for $2.8 billion.

This comes less than a year after Japanese imaging giant Canon bought Milestone, a leader in video management software, for an undisclosed amount.

“This is a massive development in the video surveillance equipment market. Until last year, Canon was a small player in this market,” IHS Principal Analyst for Video Surveillance Equipment Jon Cropley says. “In June 2014, Canon acquired the world’s largest supplier of video management software, Milestone Systems. Now, Canon is purchasing the world’s largest supplier of network cameras. All of this shows just how seriously Canon is about expanding its interests in the video surveillance equipment market.”

Axis said its board of directors unanimously supported the offer, and that three of its top shareholders representing around 40% total shares will accept it. Canon already sells surveillance cameras and sees the sector as a growing market, although it has not disclosed how much it earns from such products. The deal will make Canon a top player in the video surveillance market, which was worth an estimated $15 billion at the end of last year, according to researcher IHS. Within that market, there is a $3.86 billion segment for network-connected security cameras, which is led by Axis with a 17.5% share as of 2013.

“Canon’s acquisition of Axis is the latest in a number of major changes to the structure of the supply chain for video surveillance equipment,” Cropley says. “It comes just two months after Samsung Group sold Samsung Techwin. Today, the supply chain remains highly fragmented. The top 15 suppliers account for less than 50% of revenues and there are thousands of small suppliers. Consolidation has been anticipated for some time and Canon’s purchase of Axis could be just the start of a series of industry acquisitions in 2015.”

The deal comes after Canon late last month reported a slight increase in 4th-quarter profit, as a weaker yen and rising sales of office equipment offset weakness in a camera division competing with smartphones capable of high-quality imaging. The company, which earned over 80%t of its revenue overseas in 2014, said it would pay in cash. Axis is targeting average annual growth of at least 20% and a profit margin of at least 10%. Around half of its sales come from the Americas, 40% from Europe, the Middle East and Africa, and the rest from Asia.

Axis said it will remain as a separate legal entity within Canon, and that its current management team will stay. More details can be found in a release on Axis’ Web site.

Security Sales & Integration will continue to monitor this huge industry acquisition story.

About the Author

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Scott Goldfine is Editor-in-Chief and Associate Publisher of Security Sales & Integration. Well-versed in the technical and business aspects of electronic security (video surveillance, access control, systems integration, intrusion detection, fire/life safety), Goldfine is nationally recognized as an industry expert and speaker. Goldfine is involved in several security events and organizations, including the Electronic Security Association (ESA), Security Industry Association (SIA), Security Industry Alarm Coalition (SIAC), False Alarm Reduction Association (FARA), ASIS Int'l and more. Goldfine also serves on several boards, including the SIA Marketing Committee, CSAA Marketing and Communications Committee, PSA Cybersecurity Advisory Council and Robolliance. He is a certified alarm technician, former cable-TV tech, audio company entrepreneur, and lifelong electronics and computers enthusiast. Goldfine joined Security Sales & Integration in 1998.

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