Honeywell sells alarm monitoring business
May 6, 2004
CHICAGO - After intermittently shopping its monitoring division for several years, Honeywell International this week has agreed to sell the business to GTCR Fund VII L.P., a division of investment firm GTCR Golder Rauner LLC.
GTCR will pay $315.5 million for Honeywell Security Monitoring. The deal is subject to customary regulatory approval and should close by the end of June.
Since announcing in March 2003 that it would sell its U.S. monitoring business, Honeywell had received interest from a number of security industry players and investment firms, with United Technologies Corp., Siemens and BrinkÃ¢â‚¬â„¢s reportedly in the mix.
According to GTCR Senior Principal Collin Roche, HoneywellÃ¢â‚¬â„¢s Gary Marcinkowski, who currently heads the division, will transition to the new standalone company, along with the more than 800 employees in 45 locations. The monitoring business currently serves more than 120,000 customers.
John Mack, president of USBX Advisory Services, said the deal should have a positive effect on the security industry as a whole.
"ItÃ¢â‚¬â„¢s good for the industry to have another strong, independent national company in the industry thatÃ¢â‚¬â„¢s committed to putting capital to growing a significant business here," he said.
GTCR should be a familiar name to some in the industry. In 2001, the company sold Cambridge Protection Industries LLC to TycoÃ¢â‚¬â„¢s ADT Security Services for $1 billion in cash, or about five times its initial investment. Cambridge had been a GTCR-funded rollup of security businesses, including SecurityLink.
Roche said Honeywell Security MonitoringÃ¢â‚¬â„¢s customer mix was one of the reasons the company was interested in the acquisition.
Ã¢â‚¬Å“We like all aspects of the industry, but the commercial side is very attractive and we like seeing businesses that have balanced commercial and residential portfolios,Ã¢â‚¬Â he said. Ã¢â‚¬Å“ItÃ¢â‚¬â„¢s been known for some time that Honeywell might not view this area as strategic given their role as an equipment vendor to the industry. WeÃ¢â‚¬â„¢ve been interested in acquiring the business for a while.Ã¢â‚¬Â
Roche also said GTCR wonÃ¢â‚¬â„¢t be content to stand pat with that existing customer mix.
Ã¢â‚¬Å“We think that the business can grow in a significant way, so our orientation in this business and in this industry is to generate effective sales,Ã¢â‚¬Â he said. Ã¢â‚¬Å“WeÃ¢â‚¬â„¢re anticipating growing this business and being aggressive hirers of sales personnel.Ã¢â‚¬Â
As for how much GTCR will invest in its acquisition, Roche said no formal budget had been set, but GTCR will leverage its own portfolio to grow the business.
Ã¢â‚¬Å“We have the benefit of managing $6 billion, so weÃ¢â‚¬â„¢ll take advantage of the opportunities that are in front of us,Ã¢â‚¬Â he said. Ã¢â‚¬Å“We love the industry, we love this as a platform to continue to grow, so weÃ¢â‚¬â„¢re going to use our resources to continue to grow this business.Ã¢â‚¬Â
Roche said that for the foreseeable future, the company will continue to be known as Honeywell Security Monitoring.
For more on this story, see the June issue of Security Systems News.