Security watch

ADT and Broadview acquisition: 42x RMR is benchmark

“This will make ADT obviously larger, but more difficult to manage…and even less flexible, which should give the smaller dealers perhaps more of an advantage to emphasize their ability to provide solutions to security needs of the client versus ADT’s typical cookie-cutter approach to security.” — Dan McKimm, president of Ohio-based ProTech Security

“I think that in a lot of ways what’s going to happen right now is that some of the marketing that the collective two companies had spent in the past won’t get spent this year. My guess is that they will save some of that because they don’t need to go to market twice. At the same time I think there is opportunity for everybody going forward.” — Ed Bonifas, vice president of Illinois-based Alarm Detection Systems and president of the Central Station Alarm Association

Editor’s note: SIW was notably the first to break the story on ADT announcing its intent to purchase Broadview Security. The reporting from SIW was superb and included comments from dealers, as SIW’s Geoff Kohl, editor in chief and associate publisher, and assistant editor Joel Griffin went straight to the integrator market to see what was up. Continue to check SIW for breaking news regarding the acquisition and the best updates in the industry. – Deborah L. O’Mara

Tyco International, owners of the ADT business, announced in mid-January that it intended to purchase Broadview Security. The deal is said to be worth $2 billion and will be paid in a mix of cash and stock to Broadview shareholders at a value of $42.50 per share.

Broadview Security came into existence in June 2009, having formerly been known as Brink’s Home Security. Brink’s Home Security itself was a spin-off of the Brink’s Company, this being their residential and commercial security installing business that they developed alongside the well-known Brink’s cash transport business. Brink’s was credited with inventing and creating the model of the mass-marketed security alarm system in the 1980s—no or low money down for a basic system installed along with a long-term, multi-year monitoring agreement.

According to Naren Gursahaney, president of ADT Worldwide, once the acquisition is completed (which is expected in the second calendar quarter of 2010 after approval by Broadview stockholders and governments regulators), Broadview Security will be rebranded as ADT.

Bob Allen, CEO and president of Broadview Security, noted that in the last year, his dealers have already had to rebrand once from Brink’s Home Security to Broadview Security, but he said that the move to ADT may be even easier.

“ADT has always been the number one brand in the industry,” said Allen. “Assuming the ADT brand may be an easier switch than assuming the Broadview brand was for our dealers.”

The merger brings together over six million accounts; with roughly 1.3 million of those coming from Broadview Security and approximately 4.8 million from ADT. Gursahaney said the addition of those Broadview accounts, which are known for low attrition, would likely increase revenues by 25 percent. As for benefits to his own firm, ADT North America President John Koch said the benefits are allowing ADT North America to broaden its sales, installation and service teams, expand its direct and dealer channels, and widen the company’s geographic base.

Wayne Wahrsager, president of New York Merchants Protective Company, the firm that runs the Smith & Wesson dealer program which competes directly with ADT and Broadview Security, said the merger of the two biggest alarm dealer companies will be good for the industry.

“I believe in the long run that it will help the industry,” said Wahrsager. “It eliminates one more player, one more name in the marketplace. For us, particularly, it broadens the ability of our brand to reach alarm companies that wouldn’t do business under the ADT banner. I really think it’s positive.”

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