May 08, 2007This article was originally published by RFID Update.
May 8, 2007—The Kennedy Group, a provider of RFID, label, packaging, and promotional response products, has acquired the RFID assets of transaction giant NCR's Systemedia Division. The acquisition includes all customers, contracts, intellectual property, and equipment. Financial terms of the deal were not disclosed. RFID Update spoke with Pat Kennedy, a principal owner of The Kennedy Group and vice president of marketing and sales, about the reason for the acquisition and how it affects his company's position going forward.
"It was just a great opportunity for us to expand our business," said Kennedy, who noted that NCR approached them. NCR had a label conversion and tag business, using the same production line technology as that of The Kennedy Group. The two companies also produced tags for many of the same consumer products. "There are a lot of synergies there," commented Kennedy. "Once we took a look at the specifics of the NCR business, we decided it made sense for us."
In addition, NCR had customers in some areas where The Kennedy Group's presence was relatively small. Specifically, while The Kennedy Group had historically been stronger in compliance-focused RFID, NCR had carved out a number of client engagements in non-compliance areas. "NCR had compliance customers, but they also had non-compliance customers, and we thought that would give us good diversity," Kennedy said. He believes that the NCR RFID acquisition will accelerate his company's growth from a market position that was already strong. "We thought that by taking their customers and offering things they didn't have, we could enhance our growth."
The acquisition closed in late March, and the NCR business has been mostly integrated into The Kennedy Group, according to Kennedy. "The NCR assets are all here at Kennedy, and we're actually producing tags," he said. "We've met with a majority of the NCR customers, and we've been shipping product. We consider the integration process to be almost completed." Asked whether the employees from NCR RFID will join as well, Kennedy responded only, "At this point we're still in review of that."
The Kennedy Group is a 32-year-old company and has been active in RFID for the last seven years. RFID is one of the company's four business units; the other three are label and packaging products, logistics products, and promotional display products. The company's first foray into RFID technology was in asset tracking for verticals like automotive. While the company was a little too early on that opportunity, its experience with the technology positioned it well to take advantage of the Wal-Mart and US Department of Defense mandates that were issued some time later. As a result, the company built up an RFID business in the compliance market offering everything from proof of concept and installation to service and support. The Kennedy Group also does label conversion (buying inlays from the likes of Alien and Avery Dennison and converting them into usable tags for sale to end users), but Kennedy insists that the company is not a "tag house." It has historically targeted middle market Wal-Mart suppliers, companies whose annual revenues might range from $100 to $300 million. Its more recent non-compliance business has also come from customers about that size.
On the heels of what he considers a no-brainer acquisition, Kennedy was optimistic about the year ahead. "We're very encouraged by the acquisition. I think we're very well positioned. We've got a good team of people and a solid customer base. Our focus is just to take care of our customers."
He was also bullish on the RFID market itself, which he described as still being in its early stages. "The market's still got a way to go. There are constantly new things and changes in the technology, and we're always looking out for other applications and markets where this technology could find a home."
