GE Security Acquired by UTC for $1.8B: What it Means for Dealers

GE Security has been sold to United Technologies Corp. (NYSE: UTX), which had been the front-runner in the bid to acquire the security arm of GE (NYSE: GE).

UTC is paying $1.82 billion for the GE group, which includes access control, intrusion detection, fire protection, video surveillance, and scanning and trace detection.

GE Security -- which targets residential, commercial/industrial and government sectors – hasn't been investing enough in the residential market, some CE pros and security dealers have complained.

Will UTC change that? The company's UTC Fire & Security (UTCFS) division generates about $5.8 billion in annual revenue. GE Security, on the other hand, is on track to generate a "mere" $1.2 billion in revenue this year, according to a presentation this morning on the acquisition (pdf).

Revenues this year for GE Security will be down about $300 million from last year.

"We hope that this new acquisition will bring new money and a different direction for the product line," says Jim Stolzenbach of Questron, an Elkridge, Md-based home systems integrator and GE Security dealer.

"We feel that GE was never profitable enough in the security category to put any real money into it. It's like they got into the industry and after a while saw that they made much more profit with less headaches in other industries."

Although UTC could not be reached for comment, GE spokesperson Michelle May – who has not been briefed entirely on the deal – says UTC appears to be committed to the residential channel.

CE Pro has learned from an inside source that UTC plans to invest more than $1 million in the residential business.

What's to Become of the GE Security Brand?

The vast majority of GE Security relates to commercial and industrial applications, where the customer is probably just as familiar with UTC as GE.

But the GE brand and the famous "meatball" logo could be important to consumers.

Will UTC keep it? CE Pro has learned that the company will indeed let the GE Security brand linger for quite some time, at least in the residential sector.

GE's Michelle May did not know the specifics. She did mention, however, that some products will migrate to the UTC brand after a transition period and "in some cases, there is flexibility for use of the brand for an extended period of time."

Crime Prevention Security Systems, a GE Security dealer in Gainesville, Fla., heard from a rep that UTC would retain the GE Security name.

"Hopefully that's true because we think it's an important brand," says VP of operations Jorgia McAfee.

But does the brand really matter?

Leigh Johnson, president of Custom Alarm in Rochester, Minn., was a long-time GE Security dealer. He well remembers all the talk about the exalted GE name when the conglomerate bought Interlogix, the security company that started it all, in 2002.

"Jeff Immelt [GE CEO] and staff did not really understand the [security] business," Johnson says. "They thought if they put the “meatball” on a product, it would fly off the shelves."

That is why Custom Alarm has always promoted its own company as "the brand."

Johnson says, "We are the ones people deal with; they don’t deal with the manufactured brand, because it doesn’t mean anything."

Channel Conflict with Chubb?

UTC owns a giant alarm installation business called Chubb -- the equivalent of ADT in Canada and Asia.

Currently, Chubb does not do business in the U.S.

Even so, the potential conflict worries some integrators. When Tyco, the parent company of ADT, acquired security maker DSC in 2002, dealers practically revolted.