Construction firm Builds its business in security
DEERFIELD BEACH, Fla. - Devcon International, a publicly traded construction firm and distributor of ready-mix concrete, moved forward with its plans to enter the security market, securing $18 million in financing and then buying Security Equipment Co. for $4.5 million.
The early August transaction is relatively small in size, since Security Equipment Co. serves 3,000 customers located in the Florida Panhandle, but it provides Devcon with a seasoned management team in the security industry.
The installation business was owned by Stephen Ruzika, the former chief financial officer of ADT Limited and the president of ADT Security from 1989 to 1997, and John Dannenberg. Ruzika joins Devcon as the president of its security division, while Dannenberg becomes a member of the management team.
Ã¢â‚¬Å“It wasnÃ¢â‚¬â„¢t purchased to be the platform company,Ã¢â‚¬Â said Ruzika. Ã¢â‚¬Å“It was purchased basically by Devcon because they wanted myself and John to join the team.Ã¢â‚¬Â
Devcon International, a company with $65 million in annual revenue and 300 employees, first announced plans to enter the security market in May of this year. Company officials said they wanted to expand its portfolio and also tap into the recurring revenue model of the security industry.
But instead of building the business from scratch, Devcon looked to partner with an existing security service provider, according to Jan Norelid, chief financial officer of Devcon.
At that time, company officials expressed an interest in buying Security Equipment Co. and hiring Ruzika to run the new security division. But the deal hinged on DevconÃ¢â‚¬â„¢s shareholders approving a plan to raise additional capital. That money would then be used exclusively to build a security business.
With shareholder approval, Devcon issued up to 2 million shares of common stock. Coconut Palm Capital purchased the shares, plus attached warrants, as a result of its $18 million investment. If the company were to exercise all of its warrants, its total investment would be $64 million.
Ruzika is not the only veteran of the security industry to play a role in DevconÃ¢â‚¬â„¢s new security business. Richard Rochon of Royal Palm Capital Partners, who worked closely with Ruzika at one time, joined DevconÃ¢â‚¬â„¢s board of directors. Per-Olof Loof, the former president and chief executive officer of Sensormatic Electronics, was also selected to serve a term on DevconÃ¢â‚¬â„¢s board.
Ruzika said the plan is for Devcon to build a strong regional company through a combination of acquisitions and internal growth.
Ã¢â‚¬Å“WeÃ¢â‚¬â„¢ve done it before,Ã¢â‚¬Â said Ruzika. Ã¢â‚¬Å“Take a look at our track record in the past and youÃ¢â‚¬â„¢ll be able to see what we can do in the future.Ã¢â‚¬Â