IASG to buy NACC for $50m

It would be IASG’s largest purchase since it went public in 2003
Monday, November 1, 2004

ALBANY, N.Y.- Integrated Alarm Services Group has announced plans to pay $50 million in cash to Tyco International for its third-party monitoring station, National Alarm Computer Center, and related assets.

If completed, the NACC deal will be the biggest acquisition IASG has made since it went public in 2003.

For Tyco, it fits nicely with their strategy to shed non-core businesses, and for IASG it helps firm up their position in the wholesale monitoring business, according to Michael Barnes, president of Barnes Associates, an investment banking and consulting firm that advised Tyco on this sale.

“It gives them (IASG) a highly capable central station and large operations on the West Coast, which should help them manage a lot of the acquisitions that have taken them to the West Coast over the last year or so,” said Barnes.

NACC produces upward of $15 million a year in revenue, according to financial data provided by IASG in its press release. The four key pieces of the deal are the Irvine, Calif.-based central station’s 240,000 subscribers, the central station, a loan portfolio and alarm contracts.

Using approximate figures from IASG, the monitoring firm generates $800,000 in recurring monthly revenues in third party monitoring, equaling to $9.6 million a year. NACC owns a portfolio of alarm contracts that generate $430,000 in recurring monthly revenues, equal to $5.1 million in a year. An undisclosed amount of revenue is also generated through a portfolio of loans to alarm dealers that is valued at $29 million.

IASG spokesperson Joseph Reinhart declined to comment if the company would keep the NACC facility open or consolidate other properties into the monitoring station. Reinhart cited that the deal is slated to close in mid-November.

“We’re in the process of developing an operating plan,” said Reinhart.

The deal will further solidify the company’s presence on the West Coast. In June, IASG scooped up the assets of Glendale, Calif.-based Alliant Protection Services out of bankruptcy for $14.5 million.

Once the deal is finalized, IASG will monitor 765,000 accounts, its recurring monthly revenues from owned contracts increases to $4.8 million from $4.4 million and its loan portfolio grows substantially to $33.5 million from $4.8 million.

Tyco’s decision to shed itself of the NACC division, part of its fire and security division, can be traced to last fall, when it said it would focus on core strategic assets and divest the rest.

The NACC deal by Tyco follows its sale of Sonitrol Corp. in March, to private equity firms Carlyle Venture Partners, Spire Capital Partners and Wachovia Capital Partners for $125.5 million. Both NACC and Sonitrol fell under Tyco’s fire and security division, and Sonitrol was the first business fire and security business in North America to be sold by the company.

“We are very much focused on growing our business,” said Deb Coller, vice president of communications, Tyco Fire & Security. “It is a very small part of the portfolio.”

The deal also enables Tyco to dedicate resources to its ADT brand, a full-service security company with five monitoring centers in the United States.
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