Canadian firm Sirit is set to purchase RSI ID technologies, a privately held California-based RFID tag maker specializing in customized passive RFID tags. Sirit’s chief financial officer, Anastasia Chodarcewicz, and RSI ID’s chief executive officer, Wolf Bielas, say the merger marks a significant growth opportunity for both firms.
“There was complementary technology, opportunities and benefits for both companies to come together,” Chodarcewicz says, adding that the RSI ID merger is different than Sirit’s 2006 purchase of debt-strapped RFID reader maker SAMSys (see Sirit to Buy SAMSys Technologies), followed by reader maker TradeWind Technologies later that same year.
Those deals brought together three reader manufacturers that had targeted similar industries with comparable products. In the wake of the acquisitions, Sirit reduced its staff by more than 25 percent and closed two of its locations (see Sirit Lays Off Staff, Closes Plants).
Chodarcewicz indicates such cuts were planned from the onset of the acquisitions, adding that Sirit does not intend to take a similar tack with its purchase of RSI ID. “This is not a synergy play,” she says. “It’s an opportunity to grow our operations and talent base.” She notes, however, that if the company identifies a means of creating efficiencies in its operations through cuts, “we will take advantage of those [opportunities].”
Michael Liard, RFID research director for market research firm ABI Research, says the merger of Sirit and RSI ID is indicative of a trend ABI has been tracking: “RFID reader vendors providing value-add by innovating on top of standard RF protocols.” By acquiring RSI ID, he says, Sirit should benefit by “enabling an end-to-end-solutions approach and diversifying its product mix to include tags and inlays,” which will help the company gain a stronger foothold in its current target markets and gain entry into new ones.
Sirit has a large customer base in RFID-enabled electronic toll payment systems and automatic vehicle identification products. Its acquisition of SAMSys helped it edge into supply chain applications, where its customers include German retail giant Metro Group. RSI ID has developed a niche in customized RFID inlays and antenna designs, and currently offers more than 60 inlay designs.
“Our core competency is in going to a customer and creating a specialized product for them, and then ramping up volume to meet their demands,” says Bielas. “We are a specialty house.” That said, the company does use standardized tag protocols for the ultrahigh-frequency (UHF), high-frequency (HF) and microwave (2.45 GHz) tags it produces. While many of RSI ID’s existing customers are supply chain companies looking to track products that require customized tags, Bielas says that its customer base has grown in recent months to include many firms not involved in supply chain applications.
As a part of Sirit, Chodarcewicz says, RSI ID will now be able to approach customers with a complete hardware solution. “Sirit would focus more on the reader side, whereas RSI will provide tags, inlays and tag antennas,” she explains. “We can offer a full suite of products, so this is a growth opportunity from both of our perspectives.” Sirit, she adds, sources its active and passive tags from a number of vendors, without exclusivity, and will continue to do so going forward.
Sirit and RSI ID have been actively developing joint solutions and marketing strategies for more than a year, Chodarcewicz says. Electronic vehicle registration (EVR), she notes, is one market the two companies are targeting. EVR, in which passive tags on license plates serve to verify registration and monitor traffic, is a growing application (see Electronic Vehicle Registration Picks Up Speed). RSI ID has also developed a line of tamper-evident tags, which could add value to a number of Sirit applications, including vehicle, personnel and product tracking.
In addition, the two firms will also gain a wider geographic customer base through the merger, since many of Sirit’s current applications are deployed primarily in Europe, while RSI ID has a stronger presence in South America and Southeast Asia.
The all-stock transaction is expected to close on or near April 1 of this year. Sirit will initially pay 10 million Sirit common shares for the company. However, Chodarcewicz says, RSI ID’s shareholders will have the potential to receive additional shares over a 21-month period if the firm attains preset financial goals.
RSI ID has 21 employees and operations in Chula Vista, Calif., with a sales office in Hong Kong.