Tyco Buys Broadview Security For $2 Billion
Tyco International Ltd. and Brink's Home Security Holdings Inc. announced Monday a definitive agreement for Tyco to acquire Brink's Home Security Holdings, now operating as Broadview Security.
Following the closing of the transaction, Tyco intends to combine Broadview with Tyco's ADT security business. The cash and stock transaction is valued at $42.50 per share or approximately $2 billion.
The transaction combines two of the largest companies in the North American residential and commercial security industry. Broadview Security is one of the leading monitored security companies in North America. ADT is the world's largest electronic security provider. Tyco intends to combine the two businesses under the ADT name.
Excluding transaction and integration-related expenses, Tyco expects the transaction to become accretive to earnings before special items by approximately $0.07 in the first full year after closing, increasing to approximately $0.14 in year two. The combination is expected to result in operating synergies of approximately $150 million.
"This transaction provides us the opportunity to further strengthen our position in the residential and commercial security industry, while advancing Tyco's overall strategy to increase its presence in its core security, fire and flow control platforms," said Tyco Chairman and Chief Executive Officer Ed Breen. "Broadview's strong presence in the North American security market, significant recurring revenue and attractive margins will enhance ADT's financial performance and support our long-term growth in this large, fragmented and highly competitive industry."
"We are proud of all we have achieved as a company to increase our customer base, and to grow our revenue and income in a challenging economy,” Bob Allen, president and CEO of Broadview said. “We view this transaction as the culmination of these efforts, providing our shareholders with an attractive premium for their shares, including cash consideration and an opportunity to participate in the future growth of Tyco International."
"ADT and Broadview are an excellent strategic fit. We have highly complementary product and service offerings, strong sales and marketing organizations and a shared dedication to quality customer service," said Naren Gursahaney, president of ADT Worldwide. "We expect this combination to result in an even more efficient, more successful ADT."
Broadview Security has more than 1.3 million recurring revenue accounts throughout North America with annualized revenue of approximately $565 million. ADT has more than 7.4 million recurring revenue accounts globally and generated revenue of $7.0 billion in fiscal 2009. ADT's North American residential and small business operation, which is the most comparable to Broadview, has 4.8 million recurring revenue accounts and revenue of $2.2 billion in fiscal 2009.
“This is a good fit for residential security for ADT,” Gursahaney said. “In North America, it increases our holdings by 25 percent, to more than 5 million customers, both residentially and commercially.”
About seven months ago, Broadview was an arm of Brinks Security, but split off and is now anticipating joining forces with ADT. Bob Allen, president and CEO of Broadview Securit,y said a strong marketing and sales campaign will only enhance the union of both companies.
While the deal is not final yet, both boards at ADT and Broadview have approved the sale, which is anticipated to be completed in the second quarter of this calendar year.
“There are many benefits of the integration, to include broader sales and service to our existing customer base,” said John Kock, president of ADT North America. “We fully expect to roll out the next generation of products and services for our customers in every geographic location, including interactive services.”