Taiwan-based Hon Hai, the world’s largest electronic contract manufacturer, announced it will purchase a 50.07 percent stake in TeleEye, seeking to tap the growth potential of video surveillance and IoT.
Amid the consolidation trend in the security industry, another merger and acquisition took place: this time, Taiwan-based Hon Hai, the world’s largest electronic contract manufacturer which just acquired a majority stake in Sharp, announced it will purchase a 50.07 percent stake in TeleEye in what is believed to be a move to tap the growth potential of video surveillance and the Internet of Things (IoT).
The deal was made public on April 13, with Hon Hai announcing to purchase 419 million common shares, or 50.07 percent, of TeleEye through its subsidiary Foxconn (Far East) Ltd., at a price of HK$0.55 (US$0.07) per share, translating into a total amount of HK$240 million or $30.9 million. The unit price was approximately 6.7 percent lower than TeleEye’s closing price of HK$0.58 on April 12. Trading of TeleEye shares was suspended on April 13 due to the deal.
TeleEye is principally engaged in the development, sales, and marketing of products that make use of advanced signal processing technologies. Its vision is to become a “pioneer and the most technological advanced supplier in the global market of remote management applications," according to its website.
The company’s products include IP cameras, HD analog cameras, and related NVRs and DVRs. Vertical markets targeted include residential, banking, hospitality, and retail.
However, like all other video surveillance vendors, TeleEye faces a growingly competitive market. It has registered losses for three years in a row, reported Central News Agency (CNA), citing the company’s financials. TeleEye posted a net loss of HK$7.8 million ($1 million) and HK$6.5 million ($840,000) for 2015 and 2014, respectively, CNA reported. Getting new funds from the cash-abundant Hon Hai may be the inevitable choice for TeleEye to continue operating in the industry.
As for Hon Hai, it will see its influence expanding in video surveillance, which has increasingly migrated towards IP and become more intelligent. Technologies such as facial recognition, people counting, automatic license plate recognition, and more advanced video management functions are all better done on IP than on analog.
And with video surveillance now more IP-based, it becomes an integral part of IoT, connecting with other devices and sensors to help users achieve better situational awareness, automation, and management efficiency. According to industry experts, these are things that Hon Hai is interested in and can leverage from the TeleEye deal.
Hon Hai meanwhile maintains that the purchase is meant for new business development, adding it will execute the deal after getting regulatory approval from Hong Kong.