Teledyne acquiring FLIR for $8B in major merger

The Robot Report

Although best known for sensors, FLIR Systems acquired several companies, including drone maker Aeryon Labs (pictured), in an effort to also be known as a complete systems provider.

It is less than one week into the new year, but we already have the first major acquisition of 2021. Teledyne Technologies has agreed to acquire FLIR Systems in an $8 billion cash-and-stock deal to beef up its product portfolio. Both companies make cameras, sensor systems and unmanned systems, among other products, but there is not much overlap.

Their sensors are built on different semiconductors technologies for different wavelengths. Teledyne’s products focus heavily on aerospace, while FLIR’s sensors are used in defense, heavy industry and government. Teledyne’s and FLIR’s unmanned systems also complement one another. FLIR makes unmanned aerial drones and unmanned ground vehicles, while Teledyne focuses on unmanned maritime drones.

The transaction is subject to regulatory approval and is expected to close in mid-2021. If approved, it would be Teledyne’s biggest acquisition ever. Prior to the FLIR deal, Teledyne’s largest acquisition came in 2016 when it acquired e2v Technologies for $965M. Based on a presentation (PDF) given by the companies today, Teledyne and FLIR would have had combined 2020 revenue of roughly $5 billion on a pro forma basis.

“At the core of both our companies is proprietary sensor technologies. Our business models are also similar: we each provide sensors, cameras and sensor systems to our customers. However, our technologies and products are uniquely complementary with minimal overlap, having imaging sensors based on different semiconductor technologies for different wavelengths,” said Robert Mehrabian, executive chairman of Teledyne. “For two decades, Teledyne has demonstrated its ability to compound earnings and cash flow consistently and predictably. Together with FLIR and an optimized capital structure, I am confident we shall continue delivering superior returns to our stockholders.”

The Robot Report tracked more than 400 transactions worth more than $26 billion in 2020, compared with 384 worth about $45.8 billion in 2019. There were about 60 robotics mergers and acquisitions in 2020, compared with 86 in 2019. Here were the top 10 robotics transactions of 2020.

A breakdown of the complementary sensor offerings from FLIR and Teledyne. | Credit: Teledyne

FLIR is more than a sensor maker

Although it is best known for its sensor technology, Wilsonville, Ore.-based FLIR made several acquisitions within the past few years in an effort to become known as a provider of unmanned systems, too, not just for the sensors inside them.

Just last month, FLIR acquired Altavian, a privately-held manufacturer of small unmanned aerial systems for defense and public safety. Altavian’s airframes integrate multiple sensors, including FLIR thermal technology, to provide users with decision support and intelligence, surveillance, and reconnaissance (ISR) capability.

Perhaps FLIR’s biggest acquisition came in February 2019 when it acquired Endeavor Robotics for $382 million in cash. Endeavor, a developer of unmanned ground vehicles for military and defense applications, spun out of iRobot in April 2016. Endeavor’s robots have been in high demand because they take the place of soldiers in many dangerous scenarios, including bomb disposal, investigation of hazardous materials, surveillance and reconnaissance, and much more. Endeavor won in January 2019 a five-year contract from the U.S. Army to modernize and maintain its existing fleet of robots, a deal that could be worth $32.4 million. The Endeavor brand was rolled into FLIR’s unmanned systems and integrated solutions division.

In January 2019, FLIR acquired Aeryon Labs, a leading developer of aerial drones for the global military, public safety, and critical infrastructure markets, for $200 million. And in late 2016, FLIR purchased Norway-based Prox Dynamics, which makes nano-sized drones for military and paramilitary ISR applications, for $134 million in cash.

“We could not be more excited to join forces with Teledyne through this value-creating transaction,” said Jim Cannon, president and CEO of FLIR. “Together, we will offer a uniquely complementary end-to-end portfolio of sensory technologies for all key domains and applications across a well-balanced, global customer base. We are pleased to be partnering with an organization that shares our focus on continuous innovation and operational excellence, and we look forward to working closely with the Teledyne team as we bring our two companies together to capitalize on the important opportunities ahead.”

Providing thermal cameras for Zoox’s robotaxis

FLIR made another major announcement in mid-December 2020, revealing that its Boson thermal imaging cameras are used in Zoox’s bidirectional robotaxis. Zoox was acquired by Amazon in 2020 for $1.2 billion. Thermal cameras can detect and classify roadway objects in challenging lighting conditions both during the day and night.

FLIR’s initial foray into thermal imaging for automotive use was 15 years ago. The use of the technology, however, has evolved to advanced driver-assist systems and autonomous vehicles.

“Although thermal imaging is a more recent sensing modality in autonomy, mobility innovators, like Zoox, have come to realize its benefits for improving safety. Thermal imaging is a passive sensing modality that does not require illumination and performs equally well in bright sun glare, headlight glare, and complete darkness, while offering additional awareness in adverse weather conditions such as fog, smoke, rain and snow. In short, by using thermal imaging, ADAS vehicles can recognize and adapt to these changing conditions quickly, and as a result, improve the safety across all levels of autonomy, including automatic emergency braking (AEB).”

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Source: therobotreport

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