Canadian co. buys into biz
TORONTO--In late June, UE Waterheater Income Fund, through its Union Energy operating unit, entered into an agreement to purchase full-service security company Gestion Protectron for CDN 135 million ($109 million).
Founded in 1988 and headquartered in Montreal, Protectron--a company that added 40,000 accounts to its base when it acquired Protection One Canada from Westar Energy in 2002--accounts for approximately 176,000 residential, commercial and wholesale subscribers in Quebec, Ontario and British Columbia.
The company experienced a compound annual growth rate to its subscriber base of approximately 10 percent since 1999 and for the year that ended March 31, 2005, it recorded revenues of approximately $64 million.
Jack Mallon, an industry analyst and founder of Mallon Associates, said the firm's previous majority owners, New York-based Wellspring Capital Management, will receive a positive return once the transaction is complete.
"My understanding is the multiple is 7.5 times EBITDA," Mallon said, "which is a good price. Wellspring will make a good return on its investment."
Wellspring sponsored a management-led buyout of the company from Quebecor Media in 2001.
Mallon also noted that Union Energy may have been drawn to opportunities within the security industry because of the recurring revenue model. Union Energy currently has a similar model, although with water heaters not alarm systems. The company services more than one million natural gas and electric water heaters.
Officials from Protectron and Union Energy were not able to comment on the deal because it has yet to be finalized. It was expected to close by the end of July, after press time for Security Systems News. But Roger Rossi, UE Waterheater Income Fund's president and chief executive officer, said in a statement that the acquisition allows it to increase its customer base and its product line.