If you can forgive a mid-week observation being on a Thursday then please (friends, Romans, countrymen) lend me your ears…
As Sixteen:Nine’s Dave Haynes said in his report on the acquisition, we quote “I know both sides on this deal … but did not see this coming. I did know Cineplex has been looking around for acquisitions and was eager to grow the digital side of its business …”
But should it have taken the industry (including ourselves) by surprise? Actually I think not (we are all just fazed by the heat at the moment).
- Every business of course is (always) for sale at the right price (despite peoples’ protestations) but EK3 has been properly for sale for a long, long time – see our story ‘EK3 CEO Vehemently Denies For Sale Sign‘ from back in June 2009. Let’s hope that EK3 CEO Nick Prigioniero was a lot more honest with his employees this time around.
- Cineplex have been quite the acquisitor over the past few years and are just one of a number of big corporates with (let’s just say) a ‘managed services’ business looking to acquire a software company. Remember that back in April 2009 Cineplex purchased Alberta-based Onsite Media Network for CAD 1.7 million and in June 2010 they acquired one of the better Digital Signage integrators in Canada, namely Digital Display and Communications (DDC).
Looking forward, a combination of Cineplex’s existing digital signage business, namely Cineplex Digital Media and Cineplex Digital Networks (as EK3 will be renamed) could be a formidable competitor to many in the industry and if you think of what RMG Networks are now doing and offering, you can see a definite trend in the industry for the ‘solutions’ business.
For folks like ComQi, who surely have no option but to be bought (or simply go out of business), and perhaps for Scala, whose investors must desperately want to get rid of the ‘investment’ by now, the big question they must be asking themselves is why EK3 and not me!
The one obvious reason however is quite simply revenues. EK3 were quietly doing $28M with a $4M bottom line – similarly enough revenues were a key factor in RMG Network’s deal with Symon – strange that 😉
What this deal means to other software vendors is also of interest. BroadSign will surely lose the Cineplex business they have now and any software vendor that doesn’t see the likes of this Cineplex solutions business and RMG Enterprise Solutions (these are big, listed companies) as a serious threat ought to think again.
In his report on this deal, Dave Haynes also hinted at more M&A, he said “I was Skyping with another guy who was saying he was soon announcing a couple of acquisitions, as well”. We know others who are looking and one that is actually doing due diligence now.
I think what is for sure, is that ahead of The DailyDOOH Investor Conference in October, there are going to be many more deals announced as well as few more software vendors going out of business.