French firm sees potential in BA, security

Schneider Electric plans to buy Integral Technologies, Security Int’l and Andover Controls
Thursday, July 1, 2004

ial in BA, security

ANDOVER, Mass. - Security product manufacturers Security International and Integral Technologies and building controls company Andover Controls, three businesses now owned by U.K.-based building management firm Balfour Beatty, could soon get a new owner that wants to make inroads in the building automation and security markets.

Schneider Electric, which plans to buy the trio for $403 million, has identified the building controls market as a high growth opportunity to tap into. Known as the world’s largest manufacturer of circuit breakers, the French company already made its move into this market, buying TAC AB, a Swedish company that offers building control systems and security, last year.

“This is a very hot market right now,” said Terry McMahon, an analyst from BCS Partners in Leonia, N.J., who follows the building automation market. “The acquisition activity is really strong right now. We’re getting to the point where there are a number of players competing for this business and a position of substantial market size.”

Schneider Electric’s planned purchase of Andover Controls, Security International and Integral Technologies, is expected to close in mid-July. If the deal goes through, it would give the company prime positioning in a market whose competitors include Siemens Building Technologies, Johnson Controls and Carrier.

Andover Controls is considered in the top ten list of the largest building automation companies. The business reported sales of $169 million in 2003 and offers a global presence.

It’s security counterparts, Security International and Integral Technologies, are two well-known companies within the security market. But the two companies have only worked together for about a year and a half when Balfour Beatty bought the pair. Balfour Beatty already owned Andover Controls, but integrated that company’s security business with that of Integral Technologies and Security International.

For Andover Control’s, Schneider Electric’s interest in the building automation market means more opportunity.

“It’s pretty exciting,” said Rick Focke, marketing director for Andover Controls. “Balfour was a passive owner over the last 15 years, but Schneider wants to grow.”

According to Focke, Balfour Beatty began the sale process six months ago and interviewed a number of potential clients before deciding that Schneider Electric is the right fit. The company is now looking at combing the strengths of Andover Controls and TAC, one time competitors.

Officials from Integral Technologies and Security International declined to comment on the transaction until the deal closed.

Focke characterized security as an important market for Schneider Electric, noting that the French company has identified it as a second growth area. “They believe in the integration of those two sub-systems,” he said.

Officials from Schneider Electric in France could not be reached for comment prior to press time.