Zebra Technologies Corporation (NASDAQ: ZBRA) has signed an agreement to acquire Canada-based Matrox Electronic Systems Ltd. for $875 million. The acquisition will be accomplished through Zebra Technologies Canada ULC, a wholly-owned subsidiary of Zebra Technologies.
Following the news announcement on Wednesday, shares of this barcode maker rose 1.8% to close at $387.08. In the extended trading session, the stock gained an additional 0.8% to close at $389.99.
Headquartered in Lincolnshire, IL, Zebra is well-known for its data capture and automatic identification products, including real-time location systems, barcode scanners, and radio frequency identification devices. Its customers are in healthcare, retail, logistics, e-commerce, manufacturing, transportation, and other industries.
Rationale Behind the Transaction
Matrox Electronic, a subsidiary of Lortron Holding Corporation Ltd., is a leading supplier of a wide range of components to integrators and original equipment manufacturers in machine vision, medical imaging, and image analysis markets. Among its offerings are input/output (I/O) cards, 3D sensors, frame grabbers, software development kits, smart cameras, and others.
Annually, Matrox generates $100 million in revenues.
The acquisition is anticipated to enhance Zebra’s existing machine vision solutions offerings as well as its portfolio of software and services. Interestingly, Zebra had unveiled its machine vision and fixed industrial scanning products and solutions in May last year.
Regarding the deal value of $850 million, Zebra plans on using its available credit facilities and cash. Exiting 2021, the company’s cash and cash equivalents stood at $332 million and borrowings of $993 million were available under revolving credit facilities.
The closure of the acquisition is contingent upon the receipt of regulatory approvals and satisfaction of other closing conditions. Zebra expects to conclude the buyout this year.
Official Comments
Zebra’s CEO, Anders Gustafsson, said, “This acquisition enables us to meet our customers’ evolving needs, regardless of where they are on their automation journey—from capturing and analyzing data to facilitate decision-making to deploying physical automation solutions to accelerate the production and movement of goods and materials.”
Wall Street’s Take
Recently, Keith Housum, an analyst at Northcoast Research, maintained a Buy rating on Zebra and lowered the price target to $576 (suggesting 48.81% upside potential from the last closing price of $387.08) from $630.
Overall, the Street is cautiously optimistic on Zebra and has a Moderate Buy consensus rating based on 4 Buys and 1 Sell. The average Zebra price target of $566.20 suggests 46.27% upside potential from current levels. Over the past year, shares of Zebra have lost 18.3%.
Bloggers Opinion
Per TipRanks data, the financial blogger opinions are 83% Bullish on ZBRA, compared to the sector average of 69%.
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