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Sirit Makes RFID Acquisition

by Diane Himes, MA Editorial Staff

Posted on Tuesday, March 04, 2008 4:16:00 PM       Sign Up to receive Daily News Alerts in your E-mail Inbox                               

Looking to expand its technology portfolio and extend its geographical reach, RFID hardware provider Sirit has reached an agreement to acquire RSI ID Technologies, a supplier of RFID antennas, inlays, and tags, in an all-stock transaction.

The two companies, which had collaborated closely on RFID projects in the electronic vehicle registration space for more than a year, agreed to merge with the aim of marketing a consolidated hardware infrastructure offering to current customers and new prospects, Sirit CFO Anastasia Chodarcewicz told Managing Automation.

With RSI under its wing, Sirit will court customers across both companies' target applications within manufacturing, including supply chain, logistics, and asset tracking, as well as among retailers. Sirit is also focused on automotive vehicle identification and security and access control, while RSI's key application areas include retail and supply chains, Chodarcewicz said. The companies aim to combine Sirit's readers and other hardware, including active and passive tags, with RSI's antenna and inlay design expertise to provide a comprehensive offering for customers that need both sets of products.

Chodarcewicz acknowledged some overlap between the two providers' target customers but noted that they hope to leverage each other's established geographical strengths. RSI has a strong presence in South America, while Sirit is well-established in Europe. Both companies have solid U.S. customer bases as well, she said.

The market for electronic vehicle tracking applications is particularly strong in Europe, where many large cities have undertaken efforts to control traffic congestion, said Venture Development Corp. analyst Louis Bianchin, in an interview with Managing Automation today. A combined Sirit/RSI electronic vehicle technology offering would also be useful for monitoring truck location and other assets, he said.

The greatest demand for RFID hardware continues to come from Europe and Asia, especially Korea, according to a recent report by research firm Robert W. Baird and Co. One significant source of demand is increased development of wireless and automated data capture products integrated with RFID technology, the report noted. Baird and Co. identified an uptick in pilot projects with tag orders typically exceeding 1 million units, a trend that has crossed all industries and been encouraged by inlay prices as low as $0.06 per part.

Under the terms of the acquisition, RSI will receive an initial payment of 10 million shares of Sirit stock and will be eligible to receive additional shares over the next two years, provided certain financial targets are met, Chodarcewicz said. RSI, based in Chula Vista, CA, will operate as a separate unit within Toronto-based Sirit. The latter's stock, which trades on the Toronto Stock Exchange, closed today at C$0.27 per share.

Looking ahead, Sirit is evaluating additional partnership agreements to further its traditional business strategy, Chodarcewicz said. The company acquired two former competitors, reader makers TradeWind Technologies and SAMSys Technologies, in 2006. Sirit maintains reseller agreements with other technology vendors, including wireless middleware provider NXP Software, as well as business partnerships with Microsoft and IBM.

The company recently partnered with RFID systems and software provider TAGSYS to combine the providers' technologies for use in item-level pharmaceutical and fashion apparel applications.