ADT Security Services, the physical security integration arm of Tyco International, today announced the purchase of the security integration arm of publicly traded company FirstService Corp. That purchase was for FirstService Security, which operates as Security Services & Technology (SST) inside the United States, and operates as Intercon Security in Canada. The purchase price was valued at approximately $187 million.
According to Jay Hennick, the founder and CEO of FirstService Corporation, selling the security integration division allows the company to fous on its real estate services. Hennick said that the future of the security business looked good, but the company need to focus on its core business.
"The sale of our integrated security services division is a key strategic move by FirstService to intensify our focus as a global provider of diversified real estate services," said Hennick, in a statement released to the media announcing the acquisition. "While the future prospects of our security division are excellent, particularly its strong internal growth potential, we concluded that accelerating the growth of our three real estate services platforms through a combination of internal growth and acquisitions would create greater long-term value for the shareholders of FirstService. We are very pleased to have found the right buyer for this highly sought after asset, and are confident that industry leading ADT will take this business to the next level."
The acquisition is a significant one for ADT Security Services, adding a potential of $200 million in annual revenue from FirstService Security's operations and potentially 2,400 employees and 17 offices in the U.S. and Canada. FirstService has been in the business since 1992 and has established 2,000 current customers. The security systems division of the company has been led by Frank Brewer, CEO, and based out of Collegeville, Penn., a suburb of Philadelphia.
FirstService Security's operations Intercon Security and SST have been in the commercial security systems space, providing access control, video surveillance, employee badging, network solutions and even security staff. The security division of FirstService Corporation was built by acquisitions as well as organic growth, and the company lists itself as a "top five" security firm in North America. According to Frank Brewer, the company has been primarily focused on servicing Fortune 1000 companies and large regional organizations. The company lists such customers as Verizon, Shell, Ernst & Young, Manulife Financial, Waste Management and the University of Pennsylvania in its customer base.
As part of the acquisition, ADT's President John Koch said that ADT would be establishing an operating unit focused on complex security systems integration, with FirstService's CEO Frank Brewer at the head of this planned group. Koch said that it was unclear how many of ADT and FirstService's existing large commercial customers would be serviced as part of this new unit, but said that selecting accounts might be based on the complexity of the technology integration. Koch added that the new ADT systems integration group might also overlap some with the ADT Federal Systems group.
According to both Brewer and Koch, the combined firm would be able to expand converged security integration services, ranging from complex video solutions to converged access control and IT systems tie-ins. Koch noted that ADT parent firm Tyco was also the parent of such companies as Software House and Kantech, and that the combined offerings from these companies positioned the company especially well for deployment of converged access control solutions.
Though FirstService's firms had not been offering traditional IT systems, Brewer said the focus for the new ADT systems integration group would primarily be on IP-connected offerings, and noted that both firms had partnerships in the IT areas that allowed them to be project leaders on converged solutions. Asked whether he thought that IT VARs had gained the upper hand in terms of being able to deliver complex, integrated and converged security projects for the Fortune 1000 types of firms, Koch said he felt that ADT was well-positioned.
"I don't think that the IT industry has the upper hand in many of the large corporations," said Koch, noting that there is specialized knowledge related to security and safety systems that often presents a barrier-to-entry for firms that haven't traditionally been in the physical security space.
As part of the acquisition, Koch noted that there were overlaps in offices that might see some moves to combine real estate, but he said he didn't expect much thinning of employees as the companies merged. Additionally, Koch noted that ADT will keep the Intercon Security guarding operations in Canada, but that the company had not yet decided whether to operate that under the ADT or the Intercon brand name.
FirstService Security trades on the NASDAQ stock exchange as FSRV; ADT is listed under the Tyco umbrella on the NYSE as TYC.
