Buyout Boosts Coreco’s Market Share

Gaynell Terrell

The crowded machine vision industry got only slightly less so in June when Coreco Inc. announced that it had bought Imaging Technology Inc. of Bedford, Mass., for $14.5 million in cash.

Coreco is by all appearances feathering its nest with new products, having acquired the imaging board business of St. Laurent, Quebec-based Dipix Technologies Inc. for $5 million in January 1999. Imaging Technology had been a subsidiary of the UK conglomerate Fairey Group plc, primarily a brick-and-mortar holding company that is not known for developing technology, and was "a fish out of water," according to one analyst.

With Dipix, Coreco brought line-scanning technology into the nest, said Coreco President Keith A. Reuben. "In the ITI case, there are different synergies. Plus, the product line of ITI concentrates on frame grabbers, and we concentrate on high-end embedded products."

Reuben said there's little overlap between the two operations. "The customer lists are completely different," he said.

Imaging Technology had sales of $15 million in 1999 to the defense, medical testing and automated inspection industries. Coreco had sales of about $13 million, in high-end embedded products used in medical imaging, machine vision and industrial inspection. The combined company is expected to more than double Coreco's annual revenue, fostering market presence. The acquisition also gives Coreco a US service center and increases its coverage of Europe and Asia.

A business rival said Imaging Technology had been on the market for at least six months, during which the industry continued to turn its focus from components to software solutions. "It rounds out [Coreco's] product set. They had some holes," said an official with a frame grabber manufacturer, noting that the buyout meant parts of the industry were simply changing names rather than doubling production.

The machine vision industry has in recent years lamented its own modest success in a favorable global economic climate, with companies firmly entrenched in limited applications. With a few exceptions, the industry has failed to breach new markets, merge operations or increase production. "There's no question we have too many players," said machine vision analyst Nello Zuech, president of Vision Systems International of Yardley, Pa. "A lot of these companies have recognized there is strength to sticking to their knitting, sticking to what they know. Most of these companies are becoming market specific."

Although Coreco still does not compare in size with industry leader Cognex Corp., with $152 million in revenue in 1999, he added, "They're certainly going to be a major competitor."

As a result of the competition in the North American machine vision industry, the average price of units sold declined 7.6 percent from 1998 to 1999, Zuech said.