IASG to ASG: Not right now

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Saturday, July 1, 2006

BELTSVILLE, Md.--One month after ASG Security made public its desire to combine with holding company Integrated Alarm Services Group, neither party had much to say about whether the proposed union was likely to take place.
On May 17, ASG president Joe Nuccio released a letter that asked IASG to reconsider its decision not to combine with ASG.
As of June 14, ASG declined to comment. Likewise, IASG was mum and issued a statement that it was "postponing consideration of an unsolicited proposal from ASG Security Group, pending the final results of an independent review [by consultants Allen & Company] of IASG's strategic options to enhance shareholder value."
In the press release, Arlene Yocum, chairperson of the IASG Special Committee characterized the ASG letter as an "attempt to short cut the deliberate and thoughtful process we have put in place to obtain an advantage for ASG at the expense of IASG's shareholders."
According to Nuccio's letter, ASG presented a proposal to Albany-based IASG, owner of monitoring giant Criticom, four months ago that ASG said would "maximize value and limits risk for IASG's shareholders."
It proposed giving IASG shareholders "$3.60 in cash, plus stock representing as much as 20 percent of the combined surviving entity (which we believe should result in a premium to IASG shareholders of 25 percent or more)."
The letter said ASG's biggest concern "continues to be the value that is being lost as a result of the ongoing deterioration of IASG's business" and pointed to financial statements that showed decreased wholesale and retail RMR over the last year, and suggested that further deterioration of shareholder value would make IASG "less desirable to ASG and other potential suitors."
The letter noted that ASG has closed and integrated 26 acquisitions, has a large performing customer base, low attrition rates and an operation center with economically feasible account replacement costs. It said ASG would like to begin its due diligence process immediately, that it has the "strong support of our financing partners," and remains "very interested in negotiating a transaction with you on the basis we have discussed."
Joseph Reinhart who handles IASG's investor relations, said on May 17 that Allen and Co. were expected to present their findings "in very short order."
"There is nothing to report at this time," he said. "The work of Allen and Company will be reported to the board [and after a review] they will report what they see fit, from the report to the public."