Kidde accepts takeover bid from UTC

Acquisition is the first that UTC has made in the security market since it acquired Chubb in 2003
Tuesday, February 1, 2005

HARTFORD, Conn. - After receiving an offer a bit sweeter than the previous one, fire extinguisher manufacturer Kidde has accepted a GBP 1.44 billion ($2.8 billion) takeover bid from United Technologies Corp.

The board of the UK-based company said the offer represents a fair price for the company, which had rebuffed UTC’s previous bid.

The deal, reached on Dec. 16 after back and forth discussions between the two firms over a two-month period, paves the way for UTC to add fire-protection products to its Chubb security division, which includes the Counterforce alarm business. It also reunites Kidde with Chubb - the two companies made up Williams plc, before Chubb was purchased by UTC in 2003.

Paul Jackson, a spokesman for UTC, could not comment on the deal citing the UK’s Takeover Panel regulations.

Jack Mallon, managing director of Mallon Associates, said the deal shows that UTC is serious about playing a major role in the security market.

“It shows that GE and Honeywell will not have a free ride in the security product end of the business,” Mallon said. “The deal indicates that United Technologies wants to be a major force in this market.”

Mallon also noted that the deal - as well as Honeywell’s $1.7 billion bid for Novar, which has a security, fire and building controls division - is unusual considering the weakened dollar and the strong euro. He said the industry should be experiencing a surge from European companies - such as Assa Abloy, Group 4/Securicor and Securitas - looking to increase their market share in the United States amid the current financial markets.

“UTC reversing that trend is an interesting development,” he said. “It is remarkable that U.S. companies can afford to pay that price.”

For UTC, the acquisition of Kidde not only solidifies the company’s mark in the industry, it also augments its presence.

“Kidde’s addition will further enhance UTC’s product portfolios. With Otis elevators, Carrier HVAC systems and Chubb electronic security, we already have a pervasive presence in buildings worldwide. Kidde’s industrial fire protection and suppression products will further augment this presence,” UTC Chairman and Chief Executive Officer George David said in a prepared statement.