CCL Industries Inc., a global provider of specialty label and packaging solutions, has entered into an agreement to acquire Checkpoint Systems, a provider of electronic article surveillance (EAS) and radio frequency identification systems primarily for the retail sector. Toronto-based CCL will purchase Checkpoint for approximately US$443 million.
As part of the agreement, CCL will take ownership of Checkpoint’s OATSystems division, a provider of RFID software. CCL, which has been making its own RFID labels for more than a decade, intends to leverage Checkpoint’s products to forge further into the market for RFID labels, especially in the apparel retail market, according to Al Green, CCL’s VP of technology development. The transaction is subject to Checkpoint shareholder approval at a special shareholder meeting expected to take place during the second quarter of 2016.
CCL Industries operates three divisions: CCL Label, which it describes as the world’s largest converter of pressure-sensitive and extruded film materials for decorative, functional and information labels; CCL Container, a manufacturer of aluminum aerosol containers and bottles for the home and personal-care and food and beverage markets; and Avery, a provider of labels and label-printing services to small businesses and consumers (Avery Dennison sold its office and consumer products division to CCL in 2012).
Checkpoint’s loss-prevention solutions for the retail market include EPC ultrahigh-frequency (UHF) RFID labels, readers and services, as well as acousto-magnetic and RF EAS hard tags and labels. The company also offers price and branding labels (either with or without RFID tags) for apparel, and inventory-management solutions, consisting of RFID labels, readers, software and digital displays.
Checkpoint operates locations in 29 countries and has 21 manufacturing facilities. The RFID and EAS company, according to CCL, is the second largest provider of RFID technology in the apparel market. CCL also notes that Checkpoint is a leader in the EAS market. In fact, CCL reports, Checkpoint’s EAS technology is used to track 58 percent of merchandise owned by the top 250 global retailers.
CCL was attracted to Checkpoint’s strength in the retail market, says Green, in addition to the RFID solutions it provides. He notes that Checkpoint has a long-term customer base among global apparel brands and retailers, as well as reliable recurring revenue.
The global packaging company has been acquiring other businesses at regular intervals throughout the past 15 years, including parts of Worldmark and Sennet Security Products. During the past few years, Green says, “CCL has been watching—and been impressed with—Checkpoint.” The firm began exploring an acquisition in the fourth quarter of last year, he adds.
CCL’s own RFID-related offerings have been largely based on providing custom specialized labels or packaging, such as bottles or wraps. “If customers request RFID, we’re happy to fulfill that request,” Green states. CCL has provided RFID-based labels for customers in the health-care market, as well as companies that sell wine and spirits.
“Apparel has been an area with a lot of growth,” Green says, and CCL hopes to increase its presence in the apparel and retail market. RFID has become an increasingly important part of solutions in this sector. “That RFID piece that Checkpoint brings is certainly exciting,” Green states, adding that CCL and Checkpoint management and engineers will collaborate throughout the next year or more to design solutions for customers that would further CCL’s involvement in apparel and retail labeling solutions utilizing RFID technology. “Checkpoint brings a lot of expertise in [RFID label] antenna design,” he says, while CCL has access to more customers beyond retail and apparel that could benefit from using RFID labels.
By 2018, CCL’s management estimates, RFID labels and tag sales worldwide in apparel and footwear will reach more than 6 billion units annually, while about 3 billion more labels will be sold for other industries, such as logistics, airline baggage, access control and ticketing, and asset management. That would represent a rise from what were fewer than 5 billion labels sold last year, the company reports.