At long last, Symbol weds Telxon

By staff -- Logistics Management, 1/1/2001

Two years ago, when Symbol Technologies Inc. of Holtsville, N.Y., came courting, Telxon Corp. of Cincinnati rebuffed its suitor. This year, when Symbol proposed again, the company said "yes," and last month, Symbol completed a stock-swap merger with its former rival.

Symbol is the nation's largest supplier of bar-code equipment, according to market research firm Venture Development Corp. (VDC) of Natick, Mass., while Telxon ranks as the second-largest supplier of radio-frequency systems used in bar coding and the fourth-largest maker of batch-style terminals used in automatic identification systems. Last year, Symbol earned $1.4 billion in revenue, while Telxon reported income of $365 million.

When Symbol originally offered to acquire its rival back in 1998, Telxon spurned the $1.1 billion offer. This time, when Symbol offered a two-for-one swap of its stock for Telxon shares, the latter company accepted the proposal, even though it was worth about a third of the earlier offer.

Telxon stockholders received half a Symbol share for each Telxon share. To close the deal, Symbol issued 8.8 million new shares priced at $28 each.

Symbol executives said the combination would strengthen the company's position in a competitive marketplace for automatic identification equipment. "The purchase of Telxon is a natural evolution," says Tony Wilson, Symbol's director of marketing and communications. "It gives us some added capacity and scale as the industry matures and we come up against new and bigger competitors."

VDC analyst David Krebs says Symbol wanted to gain access to Telxon's line of products and its customer accounts. "Symbol gets a huge stake in the retail market through the acquisition of Telxon," he notes.

The ranks of bar-code equipment suppliers have dwindled over the past decade as profit margins on their products have eroded. In the past year, a number of these manufacturers have joined forces to survive. They include Welch Allyn Data Collection in Skaneateles Falls, N.Y., which acquired PSC Inc. of Webster, N.Y., and Psion PLC of London, which bought Teklogix of Mississauga, Ontario.