xG Technology has announced that it has entered into an agreement to acquire the assets of Integrated Microwave Technologies, from Skyview Capital. The $3 Million purchase price reflects a combination of cash and long-term debt. The purchase is expected to close by no later than Feb. 15, 2016.
IMT, which recorded annual revenues of $7.2 Million in 2015, has 20 years of experience in the design and manufacture of state-of-the-art wireless digital and analog video products. IMT’s primary market focus is in the following sectors: broadcast (with clients including, but not limited to, the major broadcast television networks, and NFL, MLB and NHL professional sports teams); and MAG (military, aerospace and government), with clients ranging from local and national law enforcement agencies, Department of Defense agencies and surveillance firms.
Among the operating and technological synergies expected to result from the acquisition are the following:
- Complementary market focus: IMT has a core customer roster that includes federal, state, local government, public safety, and Department of Defense agencies. These markets have unmet broadband communications needs that can be solved by the xMax secure private mobile broadband solution.
- IMT also has a strong presence in event management communications, which is an area of focus for xG. To that end, xG announced in September of last year the availability of the rapidly-deployable xMax Transportable Broadband system, which enables instant, uninterrupted communications during events, disasters and other quickly changing operating environments.
- Closely-aligned product development roadmaps, with the potential for joint development of a point-to-multipoint product for video that would allow multiple cameras to share and receive information.
- xG gains the benefit of leveraging IMT’s ISO 9001:2008 QMS approach into its own quality processes.
- IMT has proven miniaturization technology in the design of their transmitters. Their key enabling technology in this area is ultra-compact COFDM (Coded Orthogonal Frequency Division Multiplexing), which will benefit greatly from xG’s patented interference mitigation technology, which has been proven in demanding Department of Defense test environments.
- Once the acquisition is finalized, the utilization of assets are expected to realize cost savings of up to $2MM annually, due to efficiencies realizable from shared facilities, tools, processes, and especially product manufacturing, which IMT does in-house and xG currently outsources. The operations of both companies will continue to be housed in their respective locations.
- The acquisition of IMT’s assets is not expected to increase xG’s cash burn rate; and rather, should reduce it.
The acquisition of IMT will help advance xG’s business plan while opening up significant new opportunities for sales growth in xG products. It will also allow xG to add a complementary sales base with some critical mass while also enhancing the xMax opportunity. IMT’s existing relationships with clients in these markets will help xG mitigate the long sales cycles by enabling the cross-selling of each company’s products and services. John Payne will become President of the new IMT Division of xG Technology, reporting directly to xG CEO, George Schmitt. He will also be a corporate officer of xG.
