3M buying Federal Signal Technologies from Federal Signal for $110m

June 21, 2012
By Peter Samuel

2012-06-21: Federal Signal has an agreement to sell Federal Signal Technologies LLC ("FSTech") to the 3M Company for $110m cash. FSTech includes a bunch of established but independent toll systems specialty companies put together by Federal Signal Corp 2007 through 2011.

These include VESystems (software), Sirit (transponders and readers,) PIPs (cameras, license plate recognition,) Idris (electromagnetic roadway pavement loops for vehicle detection, separation, tracking and classification by axle count,) Federal APD (parking systems.)

The headline to 3M's announcement is "Acquisition Expands 3M's Traffic Solutions into Adjacent Electronic Tolling Industry"

3M's buy into a major electronic tolling capability is huge news for the industry and will pose a competitive challenge to Kapsch, TransCore, Xerox and others. 3M brings to the business an extensive and deep relationship with motor vehicle administrations in supply of license plates and with highway managers for supply of roadside signage, striping and other supplies.

A 3M statement says FSTech's solutions for electronic tolling, vehicle identification and classification, toll management software, license plate recognition, and parking lot fare collection systems, combined with 3M's traffic management solutions, will "advance the tolling and parking industry enabling seamless fare collection wherever motorists drive."

John Houle general manager 3M Traffic Safety Systems Division is quoted: "Electronic tolling and parking are key adjacencies to 3M's offering for motor vehicle systems and services. FSTech will complement 3M's offerings for the Department of Transportation, the Department of Motor Vehicles, toll authorities, and law enforcement agencies, and expand on our core traffic products for motor vehicles and roadways, and license plate validation materials."

Optimism about larger role for tolling

3M's announcement expresses optimism about tolling: "The fast-growing $3 billion electronic tolling industry is projected to grow at a rate greater than 12 percent per year as government agencies increasingly rely on tolling to fund roadway infrastructure, construction and maintenance. FSTech's
solutions for electronic tolling, vehicle identification and classification, toll management software, license plate recognition, and parking lot fare collection systems, combined with 3M's traffic management solutions, will advance the tolling and parking industry enabling seamless fare collection wherever motorists drive."

They say the transaction is expected to be completed in the second half of 2012, "subject to customary approvals and closing conditions."

Federal Signal initiated

The sale was initiated by Federal Signal which approached a number of companies about the sale of FSTech. 3M's was the best offer they got, but they take a loss on what they paid to buy them. Plus they have not made money in the years Federal Signal operated them.

Dennis Martin president of Federal Signal has said the move allows the company to "focus and invest resources in our core businesses of industrial and municipal equipment and safety and security solutions, and to reduce indebtedness, thereby improving the Company's balance sheet."

He says FSTech will work better as part of 3M.

FSTech's sales are about $100m/year, has about 500 employees and is described as having primary facilities in Arizona, California, Illinois, Michigan, Missouri, North Carolina, Tennessee, Texas, Hong Kong, Dubai and the UK.

3M is huge in license plate technology - quipped as Mark 1 Eyeball ID - developing, refining, selling and supporting most of the materials and machinery for license plates issued by the vast majority of state motor vehicle administrations (MVAs) in the US and very many of their equivalents internationally.

3M making other move in LPR

They have recently been showing a license plate film that incorporates in the outside visible light range (near IR) large machine readable barcode characters. To the extent this was adopted by MVAs and issued to vehicle owners it would offer the opportunity for cameras to get huge advances in read rates and accuracy over present visible light cameras working on the hodge-podge of styles of plates in use around America. The barcode would allow a unique number for every vehicle and get over the Z-2, 0-O, 5-S combinations and other difficulties of the current alphanumerics.

FS statement:

http://tollroadsnews.com/sites/default/files/FSCorp.pdf

3M statement:

http://tollroadsnews.com/sites/default/files/3M.pdf

TransCore for sale?

There have been signs for several months that TransCore is a possible sale. And talk that Samsung, the international telecommunications company is the most likely buyer, but no hard information.

TOLLROADSnews 2012-06-21

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