In case you slept thru the holidays you might be the last one in IFE to hear about the news: Zodiac has issued a letter of intent (LOI) to purchase seat-centric IFE system manufacturer, IMS. The deal should conclude by year-end, and from what we hear, Joe Renton is thrilled about the company and the agreement (Note: No purchase price was announced). The large French aerospace conglomerate has had a busy year and a financially rewarding one to boot. They recently purchased Heath Tecna and Contour (seating), and IFE is even more clearly in their sight as they have already put a system forward with Sicma, a previous acquisition. We understand that IMS will stay in Brea, California and present-day thinking is to keep the 250-person company intact. Further, we believe that the leadership team will remain unchanged. No doubt, naming and branding will come to the table as soon as the deal is done. We should also note that all IMS products and services (including the Northwest service operations) are included in the deal. IFExpress understands that the sales and marketing organizations will be the first to increase headcount (wink-wink, nudge-nudge). In these kinds of deals, a careful look is usually taken at the two products currently in production (RAVE & SiT) to determine a way forward and, as one insider told IFExpress, product manufacturing locations will be based upon what makes the most sense. We like the potential of a closer proximity and business relationship to Airbus too as the possibility of line-fit operations might be in the offing, not to mention early retrofit requirement knowledge.

While the IMS company spokesman was hesitant to provide much in the way of market detail, we see great value for existing and new customers based on the successful Zodiac history of acquisition and their strong balance sheet. This fiscal year, Zodiac increased sales revenue by almost 26% (Tot: 3.4 B Euros) while current operating income was also up 26.4%. If you think that growth might be an anomaly, Zodiac has had 9 straight quarters of double-digit growth! Can your IFE company say the same? It looks to us like Zodiac is majoring in single-aisle retrofit capability and may see a spurt coming in that business market. With airline employees spread thin, a package retrofit turnaround deal could be a winner for the airlines, especially with increased passenger traffic returning to the travel market.

On another note:
In case you got wind of a good size Lumexis headcount reduction… forget it! We called CEO Doug Cline and he vigorously rejected the rumor. “In fact, if anything, we have more going on today with new content services, Wi-Fi sales and marketing, new hardware installations, and ramped-up marketing efforts around the globe. Of course,” he noted, “with our founding strategy of outsourcing most engineering and manufacturing, it may look like reductions to some in the industry as we realign to current needs. But we have continuously maintained and grown our core of talented management since opening our doors.” Doug also told us to tell our readers that there may be a few announcements soon that will nail the door shut on these rumors. Nuff Sed!