Has Securicor found its match?

LONDON - Worldwide security companies Securicor and Group 4 Falck have confirmed that they are in merger talks to create a newly formed global security provider. Though the merger talks are in the early stages, with discussions between the two sides taking place for only a few months, the transaction would bring together Securicor’s security business and that of Danish company Group 4 Falck. The result would be the second largest security company in the world, with Securitas edging out the newly formed company with $7 billion in annual security sales. Jack Mallon, managing director of Mallon Associates, characterized the potential transaction as a “global realignment,” and expects limited impact on the United States market since the European and Asian market make up much of each company’s business today. Rumors have swirled for more than a year that Securicor was searching for either a buyer or a company to partner with. “This is one that has been spoken of for a long time,” said Greg Bortz, senior vice president, investment banking global business and professional services group, Lehman Bros., “and makes sense.” Group 4 Falck has aspired to become a pure-play security service company, according to Bortz. This transaction could make that aspiration become reality, with Group 4 Falck planning to spin-off two of its four businesses, global solutions and rescue and safety services. The remaining businesses, security and services, would combine with Securicor’s business, which is estimated to employ 100,000 people and has a stock market value of $1.1 billion Group 4 Falck, on the other hand, employees 230,000 people worldwide and is valued at $1.8 billion. While Group 4 Falck plans to spin off its global solutions and rescue and safety services businesses, it remains unclear what would happen to its product business, Amag Technology, a manufacturer of access control products based in Torrance, Calif. “There’s question whether Amag and the other product businesses in the U.K. would be in that portion,” said John Mack, president and chief executive officer of USBX Advisory Services, a mergers and acquisitions company. In recent years, Group 4 Falck has increased its presence in the United States. In 2002 it bought The Wackenhut Corp., a Palm Beach Gardens, Fla., guard company that provided its entrance into the guard market here. Securicor, on the other hand, operates a number of security businesses in the United States, but it is perhaps most well known for is Atlanta-based guard firm Cognisa, formerly known as Argenbright Security. The company changed its name in 2002 to distance itself from the fallout it experienced after the Sept. 11, 2001 terrorist attacks as the company provided airport security services, such as screening passengers, across the country. Some analysts speculated that there is little left of Securicor’s guard business in the United States, with only a shell company set up to handle lawsuits from the fallout of the Sept. 11, 2001 terrorists attacks. Officials from Securicor did not return phone calls for comment. It remains unclear when and if the Securicor and Group 4 Falck will happen. But the talks between the two companies represent a continuing consolidation trend in the security market, said Bortz. “You either get niche or you get big,” said Bortz. “The middle ground is disappearing.”