Best Access retools; Here comes Stanley

Stanley Works to add to its access control business, build security presence
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Friday, November 1, 2002

INDIANAPOLIS - Lock manufacturer and installation company Best Access Systems is joining the ranks of family run businesses moving towards corporate ownership, recently announcing plans to sell to Stanley Works in a deal that provides the tool and hardware manufacturer with inroads in the security industry.

The announcement comes after months of speculation surrounding Best Access, which laid off 150 workers in May and eliminated100 manufacturing jobs in 2001 as it reorganized. Despite the layoffs, Best Access posted revenues of $242 million in 2001.

The deal also comes as more conglomerates, such as General Electric and Bosch, look to enter or ramp up their presence in the security industry in recent months.

"Everybody has this focus on security now and if GE is a bell weather in security … that's what Stanley is trading off," said Joe Freeman, of J.P. Freeman Co.

The $310 million deal, expected to close before the end of this year, provides Stanley Works with a foundation from which to grow in the security market and

add to its access control business, now comprised of automatic door products and services. With Best Access onboard, that business unit would grow to $400 million.

"This is a new platform for us," said Gerard Gould, vice president of investor relations for Stanley Works in New Britain, Conn.

Traditionally, Stanley Works' focus has been on low growth markets, such as tool and door products. But that's about to change with the addition of Best Access in the company's portfolio.

"Best Access is in the faster growing electronic security market and that's a market that grows eight to 10 percent a year," said Gould. "This gets us into a high growth market with a couple of businesses, one of which is service and installation."

Best Access was founded in 1923 as the Best Universal Lock Company by Frank Best, who invented and patented the interchangeable lock core technology. Today, the company is run by Russell Best, a third generation owner of the company who took over in 1994 from his father. Despite the reduction in staff, Best Access employs 1,550 people nationwide, with about 750 people working out of the company's headquarters here.

The company also operates 10 regional sales offices and 32 satellite offices, which employ about 350 installation and service people, according to Myra Borshoff, a spokesperson for Best Access.

In a company issued press release, Best said the decision to sell to Stanley Works was a difficult decision to make, but the downturned economy has challenged the company to rethink its approach.

"This is a privately held company. They really believed that in order to fully realize the potential for this business they needed to be capitalized and the best way to do that was to seek a partner," said Borshoff.

Best Access began seeking a suitor in July and hired CIBC World Markets as its advisor.

Borshoff expects Stanley will maintain the Best Access name. "There's a lot of equity in the Best name and they've worked vigorously to brand it," she said. "At this point, there's no reason to believe that Stanley is going to change the name."

However it remains unclear whether Stanley intends to maintain Best Access' manufacturing facility or other offices here or move operations to Connecticut.

Gould said company officials will look at what makes sense economically for the company. "We are going to meet with government officials in Indiana (at the end of October) at the state level and at the city level and we'll see what they have to offer in the way of incentives."