In what surely is the biggest news to hit the street in the alarm industry, The Stanley Works announced this morning that it intends to purchase HSM Electronic Protection Services (or more commonly HSM) for a whopping $545 million. That price is reportedly worth about 60 times HSM's RMR, or 2.7 times the company's annual total revenues. The deal is expected to close early next year.
HSM, which is currently owned by private investors, is a national monitoring services provider based in Illinois. It's central station is in Minneapolis, and the company has branches across the U.S. The company has labeled itself as the second largest commercial monitoring company in North America and the fourth largest electronic security company.
The purchase moves The Stanley Works, who security division includes the self-branded Stanley Security Solutions, as well as Blick, Frisco Bay and Best. Recent years have seen the company expand deeply into security, moving the company beyond what many saw as a hammer and tape measure company whose business was driven by sales of consumer construction tools and aids (such as Bostitch, the Stanley branded tools, FatMax and others).
As the company has moved into security, it was able to do so in a way that it's service and dealer network could be a core commercial solutions provider, able to handle everything from commercial locksmithing to complex access control and CCTV solutions. Now, with the forthcoming acquisition of HSM, the company is positioned to be able to not only offer installation and maintenance service on electronic security, but will be able to complete the circle, so to speak, with monitoring.
"The addition of HSM to our electronic security business is a significant step toward enhancing our value proposition, as virtually all of our existing security customers also purchase these services," said The Stanley Works' Chairman and CEO John Lundgren in a statement announcing the intention to acquire HSM. "The acquisition will enable us to increase utilization of our extensive network of field technicians, thus enhancing overall profitability. The addition of monitoring also enables us to forge longer term customer relationships involving value-added services and recurring revenues, which should help to reposition electronic security as a higher profit and higher growth business for Stanley."
Stanley clearly already has a plan for how HSM will fit into the company. Simultaneously, the company announced it would form Stanley Convergent Security Solutions. That group will pull together Stanley's electronic access control and integration services with commercial monitoring from HSM. The unit will be overseen by Brett Bontrager. HSM's president and COO Tim Whall will also join the Stanley Convergent Security Solutions leadership team. Whall has been with HSM since 2004 and was previously with ADT as executive vice president of field operations.
Electronic security and monitoring isn't the only part of Stanley that's seeing reorganization. Current presidet of Stanley Security Solutions Justin Boswell will be runnign the company's new Mechanical Access Solutions unit, which pulls togeter locksmithing, automatic doors and other "hardware-related business activities".