We believe Infinova's valuation is unsustainable and reflects exuberance / a bubble in China. Infinova is incredibly overvalued relative to any video surveillance company not traded in the Chinese stock market.We see a number of risks in the mid to long term about the combined entities: This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. It is certainly not an expensive deal for Infinova.įor March, the deal is all cash so once the deal closes they do not have downside risk of Infinova's stock going down. By contrast, Infinova is valued at closer to a 10/1 ratio. The acquisition price, ~$90 Million CAD, was fairly modest with March Networks being valued at a price to sales ratio of 1 (even less, if you factor in that March has ~$40 Million cash in the bank, noted in the FY2011 financial report ). That noted, with so much cash and a huge valuation (~10 times March Networks), they had motive and ability to expand. Otherwise, the company is a mid tier surveillance player, both in terms of revenue (roughly the same as March) and products (generally not highly regarded). Infinova's main claim to fame is a monster IPO that provided them a huge cash warchest. Plus, today, March announced a terrible quarter with revenue dropping over 20%. While they had a number of growth quarters recently, over that same time period, revenue has been roughly flat. In the past 5 years, their stock price dropped more than 75%. March has been struggling to make the transition from DVR leader to IP video provider. Here's the forces we believe brought this deal together: The combination of the companies R&D teams may help in the design and manufacturing of new products.Infinova's manufacturing can help reduce the cost of March Network's hardware.Infinova's regional strength in the high growth Asian markets can help March Network's sales.The companies see a number of potential benefits: The plan is for March Networks to be an independent operating subsidiary of Infinova, retaining their own brand and organization. We think this combination has a high risk of being unsuccessful over the next 3 - 5 years. However, to be acquired by Infinova is simply stunning. Over the past year, signs and speculation increased that March Networks was up for sale. Long time DVR leader March Networks has been acquired by Infinova a US/Chinese video surveillance manufacturer.

March network video player