Coquitlam-based infrared vision and video surveillance company Cantronic Systems Inc. (TSX-V: CTS) has announced plans to sell its money-losing North American business operations to focus on growing operations in China.
“The North American business is losing money and so basically we’re funding the operations from the profits in China,” said James Zahn, Cantronic president and CEO.
Under the $5.7 million deal, Cantronic will sell the company’s North American operations to Vancouver-based private company Skytech Systems Inc., which will change its name to Cantronic Systems (Canada) Inc.
Zahn said the deal frees up Cantronic to focus on opportunities in the Chinese market, where the company has operated since 2008.
“In the China market we’re doing more than 100% year-over-year growth right now,” he said.
Zahn said he forsees organic growth in China, stemming from the company’s current operations, as well as possible acquisitions. Since launching in China, he said, the company has acquired four Chinese companies in the “IT internet protocol-based video surveillance space.”
The deal also makes sense for the North American business, according to Zahn. Taking that business private again, he said, will give it access to North American government R&D grants such as Canada’s Scientific Research and Experimental Development grant.
“As a private company, it will have better access to some of the government grants and that will help it to stand on its own feet.”