When Evertz released their Q2 numbers last month, the earnings press release included a short paragraph that said:
Subsequent Event: The Company, on December 3, 2010, entered into an agreement to purchase the shares of an international technology based company for under $5 million.
When asked about this purchase by equity analysts on the earnings conference call, Evertz EVP Brian Campbell did not identify the acquired company by name, but said that it had revenue of around C$9m and was modestly profitable. Campbell went on to say that the newly acquired company provides file-based workflow, automation and content management tools that will help Evertz accelerate its penetration of file-based markets, specifically those it will soon be addressing with its recently announced media server and channel-in-a-box products.
I have now had it confirmed that the acquired company is UK-based Pharos.
There is good logic behind this deal, and it appears to make sense for both sides. Evertz recently launched video server and channel-in-a-box products, but lacked the media management and automation systems required for comprehensive control. Pharos had the right software tools, but lacked a hardware platform – a situation that was increasingly becoming an issue as their competitors consolidated and aligned through M&A (e.g. Miranda’s acquisition of OmniBus) and / or as automation vendors increasingly enter the playout business with their own hardware platforms (e.g. Snell’s Morpheus ICE and the Pebble Beach Dolphin system).
Pharos co-founder Spencer Rodd told me the two companies started talking at the 2010 IBC show about how to integrate Pharos’ automation and media management products with the new Evertz playout server and channel-in-a-box products. The product integration went well and Rodd said that he was very impressed by what he saw at Evertz, especially its engineering ethos and ability to mobilize engineering teams and get projects done quickly. Once the initial integration was completed, the two companies recognized that a deeper relationship made sense, and the deal was done.
Although Pharos has been acquired by Evertz, it will remain a stand-alone business unit and both Rodd and fellow co-founder Roger Heath are remaining with the company.
Rodd says that no layoffs are planned and that Pharos is currently hiring in order to expand its team and to penetrate new markets including North America. This is clearly good news for Pharos, since the company was in danger of being stretched too thinly as it worked to deliver complex multi-site projects for customers world-wide. The additional resources now available to the Pharos team will enable them to deliver projects more smoothly, and should also give customers the confidence to invest in Pharos technologies.
The deal is due to be announced tomorrow.