Is GE Security for sale?

Reports say JPMorgan Chase is taking bids; What would a sale mean?
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Thursday, August 27, 2009

BRADENTON, Fla.—Though GE Security has not confirmed the story, Bloomberg News is reporting that GE Security is for sale, having hired JPMorgan Chase to find a buyer. Though the sources are not identified, there are three of them, and Bloomberg is reporting that “GE asked potential buyers to submit preliminary bids about a month ago.”

When asked for comment, GE Enterprise Solutions communications manager Michelle May said, “GE does not comment on rumors and speculation.” She did not, however, say GE Security is not for sale.

In April, GE sold off 81 percent of its Homeland Protection business to Safran, a French company known mainly in the security industry for its Sagem Securite business, for $580. At the time GE Security CEO and president Dean Seavers said the deal would allow GE Security to focus on its “core business”: intrusion, access, video and transmission, key control, and fire and communications. “It allows us to be that much more focused on our channel partners,” he said, “and to drive the solutions that make our channel partners more successful. It’s easy to focus on what we’re getting rid of, but there’s also what it allows us to do with the portfolio we are keeping.”

One of those channel partners is Norman Adelman, president of Security Pro dealer Alarm King, based in New Jersey and a recipient of a Security Pro Award from GE Security in 2007. Adelman said GE never followed through on a number of promises made when the company bought Interlogix in 2002 (which was itself the result of the merger of ITI (Interactive Technologies, Inc.) and SLC Technologies in 2000).

“It was [GE CEO] Jeff Immelt, himself, who said many years ago that security dealers would be able to take advantage of GE’s other businesses, and that didn’t happen,” said Adelman. He noted that GE dealers can no longer use GE Money to finance deals, that fire alarm panels were not made available to them after the purchase of the Edwards business, “and that’s crippling,” he said. “The synergy just isn’t there.”

He said the brand is the most attractive thing about being a GE dealer, but that the company has made even that piece somewhat unavailable: “They wouldn’t allow us to put the GE logo on our lawn signs or the trucks,” Adelman said. “These types of things need to be changed.”

When presented with these quotes from Adelman and the ones that follow, GE’s May said, “The team at GE Security is committed to its dealers and to security innovations that bring value, quality and performance to our customers and end users.”

However, Adelman said while the companies GE Security bought—VisioWave, Cassi-Rusco, Edwards, Interlogix—made good products, “not only did they not get better, there wasn’t even a central point you could call to get the products for three years. That’s since changed, but there’s so much primitive stuff—you call in an order to the factory and when you give them your account number, it doesn’t populate, so you have to sit there and give them your phone number and address and everything every time ... they had a terrible time transitioning their computer systems. We didn’t get a bill for a year and a half.”

Not every dealer shares Adelman's experiences, though. John Raiger at Electronic Systems of Illinois, a GE VIGILANT dealer, expressed surprise that some dealers are frustrated with GE. "I find the product and service outstanding," he said via email. "We have great technical support, great sales support and the use of GE Finance for our projects. GE has developed product lines for both channel partners (EST-VIGILANT) as well as through over the counter sales (Fireworx). I am concerned that a new purchaser would drop the channel partner arrangement."

In Adelman’s opinion, though, a sale of the company “may very well be better for the dealers. Somebody has gotta care.” He thinks there needs to be a coordinated national advertising campaign along the lines of those put forth by Broadview and ADT—“that’s what we were promised was coming.

“I’d hate to lose that logo,” he continued, “that brand name is important, but you’ve still got to get into the house. If someone came along that was dedicated to the security business, that could be a good thing. If they’re an unknown, that could be a problem. But ITI was an unknown and that grew into a great thing.”