INDUSTRY NEWS

checkpoint Exits the Video Business

Checkpoint Systems, a global leader in retail security and merchandise availability, announced in late March that its U.S. and Canadian CheckView video, intrusion, and fire/safety business will be sold to an affiliate of Platinum Equity, a California-based private equity firm.

The $5.4 million cash transaction, which is scheduled to close by the end of April, includes the use of the CheckView name, all continuing operations, and assets associated with the U.S. and Canadian business. Assets include a central station service that provides CheckView’s customers with the only 24/7 monitoring dedicated strictly to the retail industry. In addition, about 225 current employees are expected to continue with the business following the transaction’s closing.

The company will be based out of its current location in Chanhassen, Minnesota. CheckView’s recently reported fiscal year 2012 financial results were reclassified as discontinued operations. Annual revenue was $76.5 million, a drop of over 24 percent year-over-year.

Checkpoint recently rehired industry veteran Nicholas J. Khalil as the president of CheckView to oversee the transition to its new owner and to run the company going forward. Before leaving Checkpoint in late 2011, Khalil served in a number of high-level positions over a sixteen-year period, including president of its North American business unit.

Platinum Equity is a global mergers and acquisitions company with almost $3.5 billion in commitments in its two private-equity funds. The company’s current portfolio includes over thirty companies in a wide range of business segments, including industrials, manufacturing, logistics, entertainment, and hospitality.

“We are excited about the prospects for CheckView under our ownership,” said Platinum Equity Principal Jason Leach. “Platinum has an extensive track record of acquiring corporate divestitures and maximizing their potential as stand-alone businesses. CheckView will act as a platform acquisition and allow us to focus on the core business, while pursuing organic growth initiatives and strategic add-ons in a highly fragmented space.”

In a related transaction, Checkpoint sold its Banking Security Systems Integration business in October 2012 for $3.5 million. This unit was a subset of CheckView. Financial results for fiscal 2012 were also reclassified as discontinued operations. The unit reported annual revenue of about $10.75 million and a loss of a little over $3.0 million.

These two divestitures reflect a redefining of Checkpoint’s strategy in 2012 geared toward providing EAS and RFID solutions to help retailers improve merchandise availability in their stores. The company’s board of directors concluded that the CheckView and banking businesses were no longer in line with the company’s new direction.

The sales are part of a three-tiered global restructuring plan that Checkpoint has been undertaking since 2009. The major objectives are to “stabilize sales, manage margins, dramatically reduce operating expenses, more effectively manage working capital, and improve global cash management control.” Total savings are expected to exceed $100 million by the end of fiscal 2013.

Checkpoint’s total revenue for the fiscal year, ending December 30, 2012, was $690.8 million, a drop of about 9.5 percent year-over-year.

The sales are part of a three-tiered global restructuring plan that checkpoint has been undertaking since 2009. The major objectives are to “stabilize sales, manage margins, dramatically reduce operating expenses, more effectively manage working capital, and improve global cash management control.” Total savings are expected to exceed $100 million by the end of fiscal 2013.

by Robert L. DiLonardo

DiLonardo is a well-known authority on the electronic article surveillance business, the cost justification of security products and services, and retail accounting. He is the principal of Retail Consulting Partners, LLC (www.retailconsultingllc.com), a firm that provides strategic and tactical guidance in retail security equipment procurement. DiLonardo can be reached at 727-709-6961 or by email at rdilonar@tampabay.rr.com.