Ascent Capital Group, Inc., announced on Wednesday that its subsidiary, Monitronics International, has entered into an agreement to acquire Security Networks, LLC, which provides monitored security system services to 195,000 residential and commercial customers.
According to a statement, the acquisition will provide Monitronics with greater scale, an expanded footprint and enhanced growth prospects. Under the agreement, the transaction will consist of $487.5 million of cash and 253,333 newly issued shares of Ascent Series A common stock with an agreed value of $20 million. The company said the purchase price is subject to adjustment at closing and is based upon Security Networks delivering recurring monthly revenue of $8.8 million. The transaction is expected to close in mid-August.
In a live webcast held Wednesday afternoon, Ascent CEO William Fitzgerald said Security Networks was one of the “most attractive” strategic acquisitions available to the company as it boasts a strong subscriber portfolio, highly-scalable business model, robust growth characteristics and strong RMR. “We are confident Security Network will be a strong compliment to Monitronics’ operations,” Fitzgerald added.
As of June 30, 2013, Security Networks reported Acquisition RMR of $8.4 million (including approximately $0.1 million of wholesale monitoring). For the twelve months ending December 31, 2012, Security Networks generated revenue of $78.5 million and Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization)of $46.5 million. The company also maintains a strong account base with an average credit score of 720, and life cycle attrition levels in line with Monitronics’ current portfolio.
Mike Haislip, president and CEO of Monitronics, said during the webcast that they have been “very impressed” with the growth of Security Networks, which initiated more than 61,000 accounts in 2012. In addition, Haislip said that Security Networks has a newer, younger portfolio of subscribers, many of whom use interactive and home automation services.
Security Networks was recently ranked 8th on Security Dealer & Integrator magazine’s Fast50 list of America’s fastest growing security systems integrators.
The combined companies, which will have more than one million accounts and a network of over 600 dealers, will be headquartered in Dallas, Texas with Haislip serving as CEO after the transaction closes.