Hemisphere GPS Sells Non-Agricultural Operations to Chinese Company

[Updated February 4, 2013] Hemisphere GPS Inc. moved closer to a final exit from the OEM GNSS space yesterday (January 31, 2013) by signing a definitive agreement to sell the business assets associated with its non-agricultural operations to the Canadian subsidiary of Beijing UniStrong Science & Technology Co. Ltd., which will operate under the name  The cash sale price was $14.96 million.

[Updated February 4, 2013] Hemisphere GPS Inc. moved closer to a final exit from the OEM GNSS space yesterday (January 31, 2013) by signing a definitive agreement to sell the business assets associated with its non-agricultural operations to the Canadian subsidiary of Beijing UniStrong Science & Technology Co. Ltd., which will operate under the name  The cash sale price was $14.96 million.

Meanwhile, the company also announced that it plans to change its corporate name to “AgJunction Inc.,” subject to shareholder approval at its 2012 annual shareholders meeting, planned for May 2013.

Phil Gabriel, most recently vice-president and general manager of Hemisphere GPS’s Precision Products business, has been appointed president of Hemisphere GNSS Inc. and will also serve as a board member. The Precision Products segment generated revenues of approximately $13.3 million in 2012, serving marine, land survey, construction, mapping, and OEM segments.

“We are truly excited about our future growth prospects as a fully focused GNSS products and technology provider,” said Gabriel. “I would like to assure all our global distribution partners, suppliers and customers that it remains business as usual as we take our first steps forward with the strong backing of UniStrong.”

Additional GNSS expertise will come with Hemisphere GNSS’s newly appointed board of directors. The chairman is Jonathan Ladd, former president and CEO of NovAtel Inc. Also joining the board is Werner Gartner, NovAtel’s former executive vice-president and chief financial officer.

“Hemisphere’s talented team will leverage its core GNSS capabilities and product marketing knowledge with UniStrong’s high quality, low cost GNSS product design and development resources,” said Ladd.

Included in the sale are the intellectual property rights associated with the non-agricultural operations necessary to support the continued growth of those operations globally, including trademarks associated with the “Hemisphere GPS” identity. The Hemisphere GPS brand was not part of the company’s agriculture identity.

UniStrong is an 18-year-old privately owned company with more than 1,000 employees and headquartered in Beijing, China. Its founder, chairman, and general manager is Guo Xinping, 47. The company’s stock is traded on China’s Shenzhen stock exchange under ticker 002383.

On January 27, Beijing UniStrong said that it expected to report a 2012 loss of 50 to 60 million RMB (China renminbi, US$8–9.6 million), citing decreased sales and increased investment as the main reason for the forecast. Last November, the company announced that it would invest RMB 184 million (US$29.5 million) to set up a joint venture company with another five companies that would develop a navigation and location service in Beijing.

As part of the transaction, UniStrong and Hemisphere GPS have formed a “strategic alliance and a collaborative business relationship” covering supply chain management, customer support, non-competition, and perpetual technology cross-licensing. UniStrong is already a reseller of Hemisphere GPS products in China.

Although UniStrong has been actively developing BeiDou product capabilities in recent years, it has not invested in developing its own GPS technology, according to the company’s vice-president and chief technology officer, Cao Hongjie. Current products include handheld devices and larger instruments for surveying, geographic information systems, and navigation using GPS, GLONASS, and BeiDou signals.

In comments to China Daily when the BeiDou B1 Open Service signal interface control document (ICD) was published in December, Cao said he believed that domestic Chinese companies that have tried to develop Beidou applications for almost a decade might struggle to compete with U.S. counterparts in the pricing of navigation products and would lose BeiDou market share to foreign products in the short term.

"But Beidou-based industries cannot grow really big without the participation of foreign players," told China Daily. “When this market becomes really big, domestic companies, even with a small share, will also benefit.

Beijing UniStrong received a bump up in visibility a few years ago when former Houston Rockets basketball star Yao Ming invested in the company, signing a five-year endorsement contract.

“The decision to divest our non-agriculture operations reflects our focus on the core platforms necessary to extend our leadership in precision agriculture,” said Rick Heiniger, president and CEO of Hemisphere GPS.

The re-branding of the company as “AgJunction” is an integral part of the strategic re-focusing of the Company’s resources on precision agriculture. As part of the previously announced restructuring plan, the company has completed the transition of its Calgary-based manufacturing activities to its external manufacturing partner and closed its Calgary-based manufacturing activities yesterday.

The transition of the company’s head office to Hiawatha, Kansas, continues, and the Calgary location will be officially closed on May 31.