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FLIR Systems, Inc. (FLIR - Analyst Report) recently announced the acquisition of Traficon International NV, one of the leading players in video detection technologies for traffic applications, for about $46 million in cash.

Based in Wevelgem, Belgium, Traficon is a leader in video image processing software and hardware for traffic analysis worldwide. Traficon primarily innovates intelligent technology to enhance traffic safety through automatic incident detection, traffic data collection and intersection vehicle and pedestrian presence detection. The acquisition is expected to be neutral to earnings in fiscal 2013 but will be accretive from 2014 onward.

Through this integration, FLIR Systems expects to increase the pace of the adoption of FLIR technology in the increasing market for video-based traffic control solutions across the world. Apart from this, Traficon’s video analytics capabilities will be included into the other imaging lines of business offered by FLIR systems.  

FLIR Systems primarily designs, manufactures and markets thermal imaging systems worldwide. The company operates through two segments namely, Commercial Systems and the Government Systems. The Commercial Systems division designs, manufactures and markets instrument, sensor and electronics solutions that facilitate improved situational awareness and environmental analytics for commercial customers. This division also offers thermal vision and measurement products, including thermal imaging systems, automotive night vision system, and personal vision thermal cameras, which facilitates better vision at night or in adverse conditions; and electronics for the maritime market as well as integrated stem to stern networked electronic systems for various boats. The Government Systems division designs, manufactures, and markets advanced imaging and detection systems for government markets.

Companies today are primarily looking to acquire smaller but specialized companies in their core areas of operation to expand in strategic manner and thereby meet the growing demand of its customers. Consistent with this trend, Lockheed Martin (LMT - Analyst Report), one of FLIR’s prime competitors, has recently acquired a software engineering firm that specializes in the development and licensing of vehicle control station software for unmanned systems.

FLIR currently has a Zacks #2 Rank, implying a short-term ‘Buy’ rating on the stock.

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