Private Equity Firm GTCR Purchases Protection One

GTCR, a private equity firm, announced recently it has entered into a definitive agreement to acquire Protection One, a national provider of electronic security alarm monitoring services, for approximately $828 million, including assumed debt.

The transaction will be accomplished through a tender offer at $15.50 per share, followed by a merger to acquire all remaining outstanding shares at the same price.  The company's two largest shareholders, Quadrangle Capital Partners and Monarch Alternative Capital LP, representing approximately 70 percent of the currently outstanding shares, have agreed to tender their shares into the tender offer.

Protection One is the third largest provider of electronic security monitoring services in the U.S. based on recurring monthly revenues ("RMR") and is one of only three security monitoring companies with a nationwide footprint.  The company provides a full suite of electronic security monitoring services to both the residential and commercial markets.  Services offered include burglary and fire protection, access control, video surveillance, maintenance and monitoring. 

GTCR's purchase of P-One marks its third collaboration with security industry expert Tim Whall, who previously partnered with GTCR on its successful investments in Cambridge Protection Industries and Honeywell Security Monitoring.

Cambridge, operating through its SecurityLink brand, provided electronic security services to more than one million customers.  Cambridge was sold to ADT for approximately $1 billion in cash in 2001.  HSM was a leading provider of security services to the commercial market.  HSM was sold to Stanley for $545 million in cash in 2007.  Whall, previously the CEO of HSM and COO of Cambridge, will serve as P-One's CEO. 

"We are delighted to work with Tim again to build on our history of successfully growing and transforming businesses together," said David Donnini, a GTCR principal.  "Our successful track record working with Tim has been instrumental in our acquisition of Protection One.  The search for finding the right company with Tim has been two years in the making.  We are excited to invest in the alarm monitoring industry again and we believe Protection One is the best platform with which to achieve best-in-class operating metrics and profitable growth." 

"I am thrilled to be partnering with GTCR for the third time," Whall said.  "The national footprint of Protection One positions the company well to accelerate growth in the attractive area of commercial sales.  We will continue to cultivate Protection One's strong base in residential sales while leveraging the company's strengths within its developing commercial business through the use of new technology applications and an expansion of its sales force."

In connection with the transaction, Morgan Keegan & Company, Inc. and Barclays Capital served as M&A advisors and Barnes Associates served as an industry advisor to GTCR.  Latham & Watkins LLP and Skadden, Arps, Slate, Meagher & Flom provided legal counsel.

Protection One's financial advisor in the transaction is J.P. Morgan Securities Inc. and its legal advisor is Kirkland & Ellis LLP.  Lazard Freres & Co. LLC advised Protection One's board of directors and its independent transactions committee with respect to the fairness of the offer price to be paid in the transaction.

GTCR's investment in Protection One will be made from GTCR Fund IX, a private equity fund raised in 2006 with $2.75 billion of committed capital.

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