United Technologies Corporation, the parent company of firms like Lenel, Chubb and others in the fire and security business, announced on Friday that it would be acquiring the Initial Electronic Security Group from Rentokil Initial. The purchase price will be $1.16 billion (595 million pounds), and the agreement is subject to final regulatory proceedings before the deal can close.
The offer to acquire Initial has not been concluded yet, but the Rentokil board has reported that it plans to accept the bid. Initial's security business has focused on systems integration services for both fire and security, providing services in France, the Netherlands, United Kingdom and the United States.
Part of the acquisition also includes manned guard services, which UTC has publicly announced that it does not intend to keep.
Rumors of who would buy Rentokil's security division have been circulating since early February, when the company announced its intention to divest itself from security. For almost a year now, Rentokil has been separating out its security businesses. AlliedBarton purchased Rentokil's U.S.-based manned guard services in June 2006. Garda had already picked up Rentokil's Canadian guard services in March 2006. The integration group that UTC has purchased was one of the last pieces of the security business inside Rentokil, and thus the acquisition came as little surprise. The company had chosen to focus on growth of its other core businesses, most notably its parcel delivery and pest control businesses, as it solicited buyers for the security divisions.
The acquisition is sizable for UTC, bringing aboard some 3,400 employees and 100 branch locations. UTC's Chairman and CEO George David said there were obvious synergies between the Initial Electronic Security Group and UTC's own operations in fire and security.
"This acquisition builds UTC's scale and capability in the electronic security business which we regard as attractive in national markets where we have significant presence," said David in a statement released with the acquisition announcement. "This acquisition strengthens particularly our position in Europe and expands our product and service offerings to a broader range of customers there. We expect our usual strong synergies and good financial returns from the combination."