Deerfield Beach-based Devcon International, an upstart in the electronic-security business, on Thursday announced two acquisitions valued at a combined $116 million that are expected to give it a solid foothold in Florida.
Devcon has agreed to acquire Hollywood-based Guardian International, which installs and monitors burglar- and fire-alarm systems, for $65.5 million. The deal is expected to close by March. Devcon closed on the purchase of Boca Raton's Coastal Security for $50.4 million. The transactions follow Devcon's acquisition of Adelphia Communication's security services operation for $40.2 million in February.
The deals thrust Devcon among the top dozen electronic-security companies in the country -- based on combined recurring monthly revenue of $3.8 million -- as tracked by SMD Magazine.
''[We've] created one of hell of a dominant player in the state of Florida,'' said Stephen J. Ruzika, Devcon's president and chief executive.
Devcon has about 60,000 residential and commercial customers. Guardian has 32,000 customers, plus about 8,000 wholesale accounts that it monitors for other security companies. It also has operations in New York. A breakdown of Coastal's customers wasn't immediately available, but it monitors more than 165,000 systems either for its own account or other companies.
Guardian's shareholders will receive an estimated $2.40 to $2.50 a share at closing. They stand to receive another 34 cents a share, subject to adjustment, six months after the closing.
''It was a very attractive offer for our stockholders,'' said Harold Ginsburg, Guardian's president and chief executive, who started the company 12 years ago.
Sheldon Katz, Coastal's president, couldn't be reached for comment.
Ruzika said Devcon likes the electronic-security business because there are only a few dominant companies and it can easily leverage its assets.
''You can add a lot of customers without adding a lot of costs,'' he said.
However, while the electronic-security business produces strong cash flow, some firms who have tried to consolidate the industry through ''roll-ups'' have stumbled, said Pete Heckmann, an analyst with Stifel, Nicolaus & Co. in Overland Park, Kansas. He doesn't follow Devcon.
Companies have aggressively forecast how long the security-monitoring contracts and related cash flow will last, he said. ''The problem is, these contracts have finite lives,'' he said.
''It comes down to being able to achieve scale and efficiently manage the business,'' Heckmann said. ``It's not a horribly complex business.''
Heckmann noted Ruzika's industry experience. Ruzika is the former president of ADT Security Services, before Tyco International acquired ADT's parent. ADT is the country's largest security firm.
And an investment group headed by Richard Rochon, the ex-president of Fort Lauderdale billionaire H. Wayne Huizenga's private investment firm, has a large stake in Devcon.
Devcon's security business turned a tiny operating profit of $41,000 on $6.6 million in revenue in the first half of this year. Devcon's contracting and construction-materials businesses in the Caribbean account for most of its revenue.
Guardian deregistered its stock 2 Ë years ago and no longer files financial reports with the Securities and Exchange Commission. Its last SEC filing showed it was running in the red. Coastal is privately held.
Devcon expects to complete equity and debt offerings to raise money to buy Guardian, while it used borrowings to acquire Coastal.
Devcon's shares fell and closed at $9.95 Thursday.