Arius3D Corp. (fka TSX: LZR)

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Two Canadian tech firms combine in bid to dominate digital image distribution

Jameson Berkow Aug 22, 2011 – 1:43 PM ET
Noel Hendrickson/Masterfile Corp.

Noel Hendrickson/Masterfile Corp.

This stock image is one of the millions added to Toronto-based Masterfile Corp.'s collection since it was founded 30 years ago


When one Canadian digital imaging company acquires another, the motivation seems clear.

By offering $21.4-million in cash to acquire Toronto-based Masterfile Corp. late last Friday, Arius3D Corp. intends to become the world’s only digital picture distributor providing both traditional two-dimensional images and higher quality three-dimensional images. The Mississauga-based company is known for its 3D production technology while Masterfile provides access to a collection of millions of 2D stock photos.

“There is a significant opportunity in the 3D market and Masterfile is a great platform to enable Arius3D to take a leadership position in this market,” John Wood, Arius3D chief executive, said in a statement.

“The acquisition of Masterfile should enable Arius3D to commercialize its proprietary capabilities profitably and more quickly, with the objective of making the combined company a leader in the 3D segment of our industry.”

Buying Masterfile was the final act carried out by Mr. Wood as CEO of Arius3D. Effectively immediately, Mr. Wood will move to a non-executive fundraising role and Perry Monych — a former chief executive of the I.T. solutions division of General Electric and current member of Arius3D’s board of directors — will take over the top job.
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Steve Pigeon, Masterfile president, will continue as the company’s top executive following 30 years at the company’s helm. Mr. Pigeon helped to establish Masterfile as a division of the Toronto Sun in 1981 and led a consortium of employees and photographers to purchase the company from the newspaper three years later.

Today, Masterfile boasts offices in Canada, Germany, France, Italy and the United Kingdom with approximately 100 employees worldwide. The company’s collection of digital images is used for advertising, design and corporate communications purposes in more than 100 countries around the world.

Masterfile generated about $22.3-million in revenue during its most recent fiscal year with net profit coming in at about $1.5-million. Based on the value of Arius3D’s shares on the TSX Venture Exchange as of midday Monday, the Mississauga company is worth just $10.9-million.

“We believe the combination of Arius3D’s unique technology with Masterfile’s skill and experience in acquiring, marketing and licensing creative content globally provides a wonderful opportunity to build a powerful new enterprise that will benefit our clientele, contributing artists and other stakeholders around the world,” Mr. Pigeon said in a statement.

“This promises to be an exciting, challenging and hopefully rewarding adventure for all of us.”

Arius3D, which has been trading on the venture exchange under the ticker LZR since last February, expects the deal to close by Halloween 2011. Should the deal fail to close or gain necessary approvals by October 31, Arius has agreed to pay Masterfile $750,000 in termination fees.

Posted in: FP Tech Desk, Media, Software Tags: Arius 3D acquires Masterfile, Arius3D Corp., FP Tech Desk, John Wood, LZR, Masterfile, Masterfile Corp., Perry Monych, Toronto Sun


http://business.financialpost.com/2011/08/22/two-canadian-tech-firms-combine-in-bid-to-dominate-digital-image-distribution/