Matrics Inc., a Rockville company that sells electronic tracking systems, said yesterday that it agreed to be acquired by Symbol Technologies Inc. of Holtsville, N.Y., for $230 million in cash.
The early success of Matrics in selling radio frequency identification (RFID) systems made the five-year-old company one of the Washington area's more prominent local start-ups. The purchase will give Symbol, which sells bar-code scanning and retail tracking systems, access to an emerging technology that analysts say will become central to the next generation of supply chain management.
"We really see a tipping point in the market," said Todd Hewlin, senior vice president of Symbol's global products group. Companies that had been testing RFID technology are now ready to buy it, he said, and are looking for systems that can manage the whole process.
RFID systems use small tags containing electronic chips that can be attached to items such as retail goods and luggage. The items' physical location can then be tracked remotely by sensors.
Matrics chief executive Piyush Sodha, who will remain with the company, said no layoffs are expected. The Rockville location will become the center for Symbol's RFID operations.
The acquisition will mean a big payoff for several local venture capitalists who invested in Matrics, although the company did not detail their holdings.
Matrics raised a total of $38 million in three rounds of funding from investors including Novak Biddle Venture Partners of Bethesda, the Carlyle Group of the District, and Polaris Venture Partners of Waltham, Mass. Two local investment organizations, WomenAngels.Net and the Dinner Club, also hold stakes in Matrics.
"I think a lot of people are going to feel good about this," said Mark D. Ein, chief executive of Venturehouse Group in the District, the first firm to invest in Matrics. He said the company did not seek buyers but was approached by several competing suitors, including Symbol. As part of a bigger company with established customers, Ein said, Matrics will be "even better positioned than it would have been as a stand-alone company."
Hewlin of Symbol said the publicly traded company had been researching RFID technology for several years, but did not have major expertise in the field.
"Symbol was clearly behind the curve in integral competency in RFID," said Kevin J. Starke, an analyst with Imperial Capital LLC of Beverly Hills, Calif. And, he added, "without RFID, Symbol could have found itself really left out of the party."
Matrics executives declined to disclose revenue figures or say whether the company is profitable. Sodha said the company has more than a dozen clients, including McCarran International Airport in Las Vegas and International Paper Co.
Adoption of the technology is just beginning, Sodha said. Wal-Mart Stores Inc., for example, has asked 100 of its biggest suppliers to start using RFID tags by January.
Shares of Symbol closed at $12.48 yesterday, down $1.47.