Leader in bar code systems buys Matrics for $230 million

Rockville business makes radio-frequency ID tags

July 29, 2004|By Paul Adams | Paul Adams,SUN STAFF

Matrics Inc., a Rockville-based technology company that makes radio-frequency identification tags used for electronic tracking, has been sold to Symbol Technologies of Holtsville, N.Y., for $230 million.

Matrics, a 5-year-old privately held company with 64 employees, has been a pioneer in the rapidly growing market for radio-frequency identification systems, which could someday challenge the bar code as the preferred method for tracking everything from merchandise to airport luggage.

The deal will give Symbol, the nation's largest provider of bar code systems, a foothold in a roughly $1 billion market that is growing about 25 percent annually. Matrics officials say the sale, expected to close in September, will provide its Maryland employees with a measure of security and help the company accelerate its growth plans.

"It gets us there in almost one leap, if you will, rather than in many, many steps over time," said Piyush Sodha, Matrics' chief executive. Sodha will stay with the company.

No plans for closing

A Symbol executive said the company, which had sales of $1.5 billion last year and employs 5,600 worldwide, plans to keep Matrics' Rockville facility open.

"We anticipate the Rockville facility will be a center for excellence for RFID [radio-frequency identification], and we'll use it to complement our teams here in New York, as well as California," said Philip Lazo, vice president and general manager of the company's RFID division.

Matrics is an innovator in the production of small RFID tags, which contain microchips equipped with antennas that transmit data back to an electronic reader. The devices are so small and paper-thin that they can be attached to virtually anything, allowing retailers and distributors to track goods as they go through the door without having to manually scan each pallet or crate with a bar code reader.

Similar technology is used by transportation authorities to allow motorists to pay tolls wirelessly.

Matrics was founded by William Bandy and Michael Arneson, two former National Security Agency engineers. The company has raised about $38 million in several rounds of venture financing, but Sodha would not disclose its revenue or say whether it was profitable. Key customers are in the defense, transportation and retail industries.

Wal-Mart influence

The devices are being tested by Wal-Mart Stores Inc. and other retailers as a better way to track merchandise. The retail giant has mandated that its suppliers switch to RFID technology by next year.

The Pentagon also has shown interest in the technology to track supplies and sensitive materials. But experts say it will be years, if not decades, before RFID replaces current bar code systems.

Symbol provides integrated supply tracking systems to United Parcel Service, major grocery chains and retailer Home Depot, among others.

The company has been troubled by an accounting scandal under previous management that forced the company to restate earnings for two years. Last month, the company agreed to pay $138 million to settle private class action lawsuits and a civil complaint brought by the Securities and Exchange Commission.

Deal at a glance

MATRICS INC.

Headquarters: Rockville

Sale price: $230 million

What its does: Makes radio-frequency identification systems used to track merchandise, supplies

SYMBOL TECHNOLOGIES

Headquarters: Holtsville, N.Y.

Annual sales: $1.5 billion

What it does: Provides bar code systems used to track and manage merchandise, supplies

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