Albany-N.Y.-based Integrated Alarm Services Group (IASG), which works with security alarm dealer companies to provide alarm contract financing and monitoring, including the purchase of dealer alarm contracts for its own portfolio and providing loans to dealers collateralized by alarm contracts, has entered into an asset purchase agreement to acquire most of the assets of National Alarm Computer Center (NACC), a unit of Tyco Fire and Security. The deal is expected to close by mid-November, but is still contingent and subject to a number of conditions, including governmental approval as detailed in the Hart-Scott-Rodino Antitrust Improvement Act of 1976.
According to IASG Director of Investor Relations Joseph Reinhart, the sale price is $50 million cash, and the purchase price will primarily include NACC's central monitoring station, a state-of-the-art facility in Irvine, Calif. According to IASG, NACC creates recurring monthly revenues of approximately $800,000 from third-party monitoring, and also own a portfolio of alarm contracts worth approximately $430,000 in recurring monthly revenues. Most of these contracts are based in California. Reinhart said that the plan for how to transition current Tyco-affiliated alarm providers to IASG has not been pinned down due to the contingent nature of the deal.
The company also said that the company will be undertaking a portfolio of NACC's secured loans to alarm dealers totaling approximately $29 million. According to Reinhart, the purchase of $29 million in loans represents "a big step in our company's presence in that area" and is "considerably larger than [IASG's] existing portfolio." The company's existing loan portfolio currently sits at approximately $4.8 million.
The purchase of the monitoring station gives IASG a fourth central monitoring location, complementing locations in Southern California, Minneapolis, and New Jersey, and continues the company's expansion into the West Coast market.
Reinhart said that the announcement of IASG's agreement to purchase NACC follows company news in December of last year to purchase Protective Services Inc. (PSI), and November 2003's news of IASG's purchase of Las Vegas-company AHS. Both previous purchases were dealer/alarm companies; PSI also provided alarm monitoring services to its clients.
The agreement is expected to boost the number of subscribers to IASG's monitoring services from approximately 525,000 subscribers to close to 765,000 subscribers. The company also said that the recurring monthly revenues that are attributed to owned contracts will increase from $4.4 million to approximately $4.8 million. Additionally, IASG's total loan portfolio will grow from approximately $4.8 million to nearly $33.5 million.