Home Internet of Things Aerospace Apparel Energy Defense Health Care Logistics Manufacturing Retail

Zebra Acquires Active RFID Provider WhereNet

Specialty printer solution provider Zebra Technologies has entered the active RFID market by acquiring real-time locating systems (RTLS) technology provider WhereNet for $126 million in a deal announced yesterday.
Jan 12, 2007This article was originally published by RFID Update.

January 12, 2007—Active RFID provider WhereNet has been acquired by Zebra Technologies in a $126 million cash deal that was announced late yesterday and is expected to close by the end of the month. The deal brings together privately-held WhereNet, a leader in real-time locating system (RTLS) technology for industrial asset management, and Zebra, a longtime leader in bar code, passive RFID smart label, and other specialty printing solutions.

"Active RFID is a natural complement to passive RFID and bar coding, two key Zebra strengths, as it enhances our ability to deliver business improvement solutions to customers worldwide," Zebra chairman and CEO Edward Kaplan said in Zebra's announcement.

Kaplan said WhereNet will continue to operate as a standalone entity for the foreseeable future and will retain its focus on core markets. Zebra will quickly begin exploring how to leverage sales and marketing opportunities, but most business operations at both companies will be largely unchanged in the near term. WhereNet CEO Dan Doles will continue to lead the company.

In a conference call for media and financial analysts, Zebra executives said combining WhereNet's technology leadership, customer base, and management with Zebra's global reach, sales and marketing prowess, and industry leadership will help accelerate RTLS adoption and lead to new sales opportunities for Zebra's core products. Zebra says active RFID is the natural extension to its tracking technologies, which started with bar code labels and extended to passive UHF and HF RFID technology. Zebra is the worldwide market share leader for thermal bar code label printers and may well also be the RFID printer/encoder market share leader.

WhereNet is a ten-year-old company that has established a solid customer base in manufacturing, particularly in the automotive sector, where automakers use WhereNet systems for shop-floor replenishment and logistics tracking applications. The company competes with active RFID and RTLS vendors like AeroScout, Ekahau, PanGo Networks, and Savi Technology.

Kaplan cited market research by IDTechEx that projects the active RFID market will grow from $550 million in 2006 to $1.6 billion in 2016, and a Yankee Group projection that the segment will experience 100 percent annual growth rates for the next five years (see RTLS Market To Exceed $1.6 Billion by 2010).

Last year Zebra acquired $10 million in RFID intellectual property from BTG (see Zebra Buys $10m in RFID Intellectual Property) and licensed 13.56 MHz technology from Magellan Technology, leading to speculation it may enter the reader business.

Zebra has been a high-growth company throughout its 39-year history and has a proven track record of making acquisitions to position it for growth. Most acquisitions have leveraged the company's position as a specialty print solutions provider, including its purchases of desktop label printer manufacturer Eltron and mobile printer maker Comtec in the bar code industry, plus other manufacturers of ID card printers and unattended printers used in kiosks.

There is one interesting exception to Zebra's successful acquisition history. In 1995 Zebra diversified its presence in the bar code industry by purchasing data collection software maker Vertical Technologies (VTI). Zebra later exited that business, although some of the functionality is used in Zebra's bar code labeling software. The acquisition was not as successful as had been hoped, in part because of the challenges of integrating a software company with a different business structure, and competing in new segments -- challenges it faces again in absorbing WhereNet.

Kaplan acknowledged some of these differences, specifically the long sales cycle for RTLS systems. WhereNet's proven success in this environment over ten years made the company very attractive to Zebra, especially in light of the expected market growth. He said there was some competition to acquire WhereNet, and the deal was in the works for about three months.

"Strategically, this looks like a great move, but at this price [$126 million for the acquisition] the financial payback from this transaction may be a ways off," industry analyst Chris Quilty wrote in a preliminary report on the announcement. Quilty is senior vice president at investment firm Raymond James & Co.

Zebra said WhereNet had $36 million in sales in 2006 and projected it would grow to $50 million in 2007. It said it will not provide sales forecasts in the future. Zebra had $186.4 million in sales in its most recent quarter and will report Q4 and full-year results on February 14th.

After buying WhereNet, Zebra still has approximately $450 million in cash reserves that could be used for future acquisitions. CFO Randy Whitchurch said, "The WhereNet acquisition was an important step in Zebra's strategy to redeploy our financial reserves to create shareholder value."
  • Previous Page
  • 1
  • Next Page

Login and post your comment!

Not a member?

Signup for an account now to access all of the features of RFIDJournal.com!

Case Studies Features Best Practices How-Tos
Live Events Virtual Events Webinars
Simply enter a question for our experts.
RFID Journal LIVE! RFID in Health Care LIVE! LatAm LIVE! Brasil LIVE! Europe RFID Connect Virtual Events RFID Journal Awards Webinars Presentations