A Q & A with Tom Nugent on the impact of the recent acquisition of ValTech International ( VTI ) by the MEI Group, a Platinum Member of EKN since 2004.

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A Q & A with Tom Nugent on the impact of the recent acquisition of ValTech International ( VTI ) by the MEI Group, a Platinum Member of EKN since 2004!

02 June, 2007 - Last April (2006) Bain Capital, a leading global private investment firm, and Advantage Partners, one of the foremost private equity firms in Japan, announced they had entered into an agreement to acquire unattended payment systems provider MEI Conlux from Mars, Incorporated. At that time MEI Conlux was the global leader in payment acceptance systems used widely in vending, gaming, transport and retail applications.

In April 2007 more changes were set to take place along with an important ruling in the long-standing litigation between Mars, Incorporated and Coinco (Coin Acceptors, Inc.) with Mars being awarded over $13 million for Coinco’s infringement of MEI’s coin recognition patents. When the case was filed 14 years ago, MEI was part of Mars, Inc., but MEI is now privately owned. When Mars sold MEI in June of 2006, all currency recognition related patents were assigned to MEI.

Today MEI has the largest worldwide installed base of unattended payment mechanisms. In 2004, MEI reached a milestone of selling more than 3.5 million note acceptors, 4.5 million coin mechanisms and 1 million control boards worldwide. Its products are in widespread use in the vending, soft drink, gaming, amusement, transportation, retail, and kiosk markets. MEI systems are relied upon for more than 1 billion transactions per week in 90 countries.

This month MEI announced they had acquired the assets of VTI, a provider of currency validation products based in Las Vegas, Nevada. The acquisition adds the VTI Vector and Matrix products to the existing MEI Conlux product portfolio provided to the Retail, Transportation, Amusement, Vending and Gaming markets. These two products complement existing technologies and enable MEI Conlux to offer a broader range of solutions to both existing and new customers.

We wanted to find out more about what is going on in the inside of excellent organization and the strategic importance of this acquisition and how it has strengthened the MEI Product offering. We spoke with Tom Nugent, Executive Vice President who offered these insights.

EKN: "Tom thank you for taking time to share your insights with our readers. Before we discuss the acquisition, tell us about the scope of MEI Globally?"
Tom: "We employ 1,200 associates worldwide, with four ISO-certified manufacturing plants on three continents, sales offices in 10 countries and a distribution network covering over 100 countries."

EKN: "Tell us about your role and if it has changed since the change of ownership to Bain Capital?"
Tom: "My responsibilities have remained similar pre- and post-transition of ownership. Currently, I am accountable for all aspects of the global gaming business. As a corporate officer, I have had the additional responsibility for the VTI acquisition, which will touch all of our divisions including gaming, retail, vending, and transportation.

The change in ownership to Bain Capital has been somewhat transparent to our business and operations. Their engagement has driven more focus, enhances our thinking, and challenges us to grow more rapidly and expand into new areas. "

EKN: "Please explain what the relationship was between VTI and MEI Conlux prior to the acquisition?"
Tom: "We had come to know VTI over the course of the past several years. Their products are of a format that MEI did not have available within our product portfolio. We looked at several different offerings and chose VTI as a partner because their basic hardware is of sound design and we knew that their firmware could be enhanced to improve security and acceptance.

We reached a key agreement about a year ago to co-develop a product line we call the MEI GEO – a performance-for-value offering - and now with this acquisition we solidify the work we had begun."

EKN: "So that works well with your recognition technology, correct?"
Tom: "Yes. The fundamental infrastructure for bill recognition is present, and we are able to analyze the data captured to improve the performance."

EKN: "There are many small Kiosk OEM’s that use bill acceptors as a critical part of their applications. Can they use a simple USB Interface and if so how do the new VTI Products support that MEI Product line?"
Tom: "Within our total product offering we have quite a significant number of both products and interfaces pending the need of the customer. We have several USB protocol versions and will work directly with customers to help them integrate our products."

EKN: "Is there one software, driver, that a customer can use for all of the products or is each one unique?"
Tom: "Given the functionality of each product, there are enhancements or difference pending the actual usage and the need for functionality with the kiosk. For example, the communication protocols necessary for a unit with a stacker might have different commands than a stackerless unit or a coin mechanism."

EKN: "It sounds like MEI Conlux has rounded out your offerings by adding the Matrix and Vector. Will you now operate out of the Las Vegas facility used by VTI?"
Tom: "VTI operates in 3 offices around the world including Las Vegas, Vienna, Hong Kong, and Shenzhen China. We will continue to operate from these offices to serve the VTI customer base and consider integrating offices where it makes sense. For example, MEI associates in Las Vegas are now working from the VTI office."

EKN: "So then what is your corporate vision of the near term?"
Tom: "The vision is simple, to provide the best products utilizing our core recognition technology to existing and new customers. MEI is an innovation company and our leadership in the industry is based upon both technological capabilities and relationships with customers."

EKN: "We would like to thank Tom Nugent for sharing his thoughts and insights with us. We would also express our appreciation for the ongoing support that MEI Conlux has provided as a Platinum Member Company of EKN."

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