Security

Tyco Buys Brink’s Home Security for $2 Billion

The acquisition gives ADT, which is owned by Tyco, a 50 percent 30 percent share (forecast amended by IMS Research) of the market for monitored residential alarm systems.


Julie Jacobson · January 19, 2010

Tyco International Ltd., owner of ADT, has acquired competitor Brink’s Home Security for $2 billion in cash and stock.

Tyco intends to combine the two businesses under the ADT name, the company said in a statement.

Brink’s, which now operates as Broadview Security, has more than 1.3 million recurring revenue accounts throughout North America with annualized revenue of approximately $565 million.

ADT has more than 7.4 million recurring revenue accounts globally and generated revenue of $7 billion in fiscal 2009.

ADT’s North American residential and small business operation, which is the most comparable to Broadview, has 4.8 million recurring revenue accounts and revenue of $2.2 billion in fiscal 2009.

ADT owns 29.7 percent of the North American security market, according to a 2007 study by Barnes Associates. Brink’s has a 4.9-percent market share. The next biggest players are Monitronics, a security dealer network, at 2.4 percent, and Stanley (formerly Honeywell Monitoring Services) with 1.4 percent.

Combined with Brink’s, the new ADT will have a

50-percent

30 percent share [amended data from IMS] of the market for monitored residential alarm systems, according to IMS Research, but that is far from a consolidation of the industry.

The bulk of the security installation market — some 60 percent — is controlled by independent dealers, and that figure has remained fairly stable over the years, sources tell CE Pro.

Lehman Brothers estimates that this group consists of “more than 14,000 small and midsized regional players.”

Even though Tyco owns security manufacturer Digital Security Controls (DSC), ADT has not standardized on that product line. In addition to DSC, the security company installs products from GE Security and Honeywell.

Brink’s, over the years, has installed products from C&K Systems, which is now part of Honeywell. According to the CE Pro 100 report, Brink’s continues to use Honeywell products.

About the Acquisition

Tyco, based in Schaffhausen, Switzerland, said it is paying $42.50 per share for the Irving, Texas-based provider of home security services, representing a premium of more than 35 percent over Brink’s stock, which closed Friday at $31.42.

The acquisition price amounts to 42 times the amount of Brink’s monthly recurring revenue, which is on the high-end of the industry norm, but not off the charts, according to security industry experts.

Brink’s shareholders will have the option to receive $42.50 per share, a combination of cash and Tyco stock or shares of Tyco alone. Tyco expects the deal to close in the second half of its fiscal year, which began Sept. 26, 2009.



Find Out Why 63% of Integrators Expect Outdoor Business to Grow - CE Pro Download

The outdoor technology market is growing – both the demand from customers and the array of products available. According to our recent CE Pro survey, integrators are taking advantage of this opportunity to grow their businesses. Get your copy of the survey today.




  About the Author

Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at julie.jacobson@emeraldexpo.com

Follow Julie on social media:
Twitter · LinkedIn · Google+

Julie also participates in these groups:
LinkedIn · Google+

View Julie Jacobson's complete profile.



  Article Topics


Security · News · ADT · Brinks Home Security · Mergers and Acquisitions · Security · Tyco · All Topics
CE Pro Magazine

Read More Articles Like This… With A Free Subscription

CE Pro magazine is the resource you need to keep up-to-date on the latest products, techniques, designs and business practices. Subscribe today!

Subscribe Today!