NEW HARTFORD — PAR Technology Corp. (NYSE: PAR) completed the asset sale of its PAR Logistics Management Systems (PAR LMS) subsidiary to ORBCOMM, Inc. (NASDAQ: ORBC) on Jan. 12. The sale is valued at about $6 million in cash and ORBCOMM common stock, with the potential for an additional earn-out of $4 million. “We are […]
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NEW HARTFORD — PAR Technology Corp. (NYSE: PAR) completed the asset sale of its PAR Logistics Management Systems (PAR LMS) subsidiary to ORBCOMM, Inc. (NASDAQ: ORBC) on Jan. 12.
The sale is valued at about $6 million in cash and ORBCOMM common stock, with the potential for an additional earn-out of $4 million.
“We are very pleased with the completion of this transaction, as the sale of PAR LMS is a solid step in the implementation of our strategic plan,” PAR Chairman and CEO Paul B. Domorski said in a news release. “Our company will continue to focus on improving shareholder value by developing innovating technologies and growing our profitable business segments in hospitality technology and government solutions.”
PAR’s main business is hardware and software products for the hospitality industry including point-of-sale systems for quick-service restaurants like McDonald’s — PAR’s largest customer — and scheduling systems for spas and hotels.
PAR LMS focused on the cold-chain trucking industry, providing monitoring products that allowed customers to track their products during shipping. LMS was a long-time subsidiary of PAR, but the company brought it into the spotlight in recent years as it worked to grow that business.
However, when discussing the company’s third-quarter earnings in 2010, PAR came under fire from one investor because the LMS subsidiary was losing money. PAR LMS had received federal funding for five years to develop transportation solutions, but lost that funding.
During a conference call with media and investors, Justin Borus, a managing member of Lazarus Investment Partners, LLP of Denver, Colo., called out company officials for the toll LMS was taking on overall earnings at the company. The LMS division, with that loss of federal funding, took a 3-cent per share bite out of PAR’s earnings that quarter.
“How do you justify not selling this business or doing something with it?” Borus questioned company officials at the time.
PAR officials countered by saying new clients, such as Chiquita Brands International, Inc., proved that LMS was on the right track for growth.
And, LMS revenue did pick up in 2011. LMS revenue grew 21 percent in the second quarter with new customer additions like Alliance Shippers and 14 percent in the third quarter as concern for food safety resulted in increasing demand for cold-chain monitoring and reporting products. PAR officials never broke out LMS’s revenue, but said early in 2011 that it comprised about 3 percent of PAR’s total revenue.
Borus did not respond before press time to requests for comment on PAR’s sale of the LMS division, first announced Dec. 28. PAR officials declined to comment beyond the information they provided in the news release, and ORBCOMM did not respond to requests for further comment.
When the deal was announced, ORBCOMM CEO Marc Eisenberg said his company expected to offer customers increased features, higher levels of integration and increased sales through the addition of PAR LMS, its customers, and its employees. Neither company released information on how many PAR employees were impacted by the sale.
ORBCOMM (www.orbcomm.com), a machine-to-machine data-communications company, has customers including Caterpilar, Inc.; Doosan Infracore America; Hitachi Construction Machinery; and Volvo Construction Equipment. For the third quarter of 2011, ORBCOMM reported net income of $555,000 on revenue of $13.9 million.
PAR Technology Corp. (www.partech.com) is a provider of restaurant and retail technology including point-of-sale systems and hotel-management systems. PAR reported 2011 third-quarter revenue of $59.8 million and net income of $1.2 million. The company, headquartered in New Hartford, also provides computer-based system-design and engineering services to the Department of Defense.