BANGALORE, March 12 (Reuters) - Thermal imaging and infra-red camera maker FLIR Systems Inc (FLIR.O) said on Thursday it is not putting itself up for sale, a day after its rival Axsys Technologies AXYS.O confirmed it was evaluating a possible sale.
“We have been very clear that we have everything we need within FLIR to be successful,” Tony Trunzo, senior vice-president, told Reuters.
Axsys, which makes defense surveillance and imaging systems, on Wednesday said pressure on its stock had led to “an increasing number of overtures from interested strategic buyers.”
Axsys shares rose 37 percent after the company put itself up for sale for roughly $60 a share, a deal that could trigger a wave of consolidation in the defense technology sector.
“Consolidation could happen. There will be some smaller defense companies that may look at the opportunity at this point to become part of larger entities especially with the funding changes that are probably expected over the next couple of years in the industry,” Needham & Co analyst James Ricchiuti said.
Ricchiuti, however, said he does not see FLIR as a potential buyout candidate, given that it has a different business profile from Axsys.
FLIR’s government systems segment makes imaging products for the military and accounts for more than half of its overall revenue. The company also has commercial vision systems and thermography units.
“I think the noise and buzz around Axsys in the industry will probably help (FLIR) stock price,” said Boenning & Scattergood Inc analyst Michael Ciarmoli, who feels FLIR shares are undervalued now.
Shares of FLIR have more than halved since touching a high of $45.49 in July 2008.
The Axsys deal does not signal a major shift towards consolidation activity in the defense technology industry, FLIR’s senior vice-president said. “With the market tumult that we have right now, it is very dangerous to speculate on the basis of one transaction, and what that might mean for the overall market,” Trunzo said. He refused to comment on FLIR being a possible suitor for Axsys, and said: “By and large our acquisitions have tended not to be competitors.”
Trunzo said about a third of Axsys’ revenue is in areas that are competitive with FLIR, but the rest of it is optics and businesses that do not match FLIR’s line of business.
Boenning & Scattergood’s Ciarmoli thinks there are other areas and technologies and capabilities that FLIR would be looking to add to its portfolio.
The most attractive piece of Axsys’ business is surveillance and FLIR already has it, he added.
Shares of FLIR were up 45 cents at $20.33, while Axsys shares were up $3.34 at $39.61 in afternoon trade on Nasdaq. (Editing by Saumyadeb Chakrabarty and Deepak Kannan)