Merger closes the book on IASG
ALBANY, N.Y.--In an interview following the announcement Dec. 20 of Integrated Alarm Service Group's plans to merge with Protection One, director of IASG investor relations Joe Reinhart chose not to speculate on the fate of IASG's 730 employees: "I would expect that there will be changes, but at this point in time the details of the plans and the models of financial budgeting are still in the process of being evaluated ... any speculation at this point would be imprudent speculation."
It's more uncertainty in what must be described as a wild ride for IASG. Protection One offered IASG stockholders .29 shares for each IASG share held, putting the value of the deal at about $85 million.
If approved by stockholders, the deal will close in 2Q of this year, representing less than 50 cents on the dollar for anyone who participated in the $200 million IPO, which saw Criticom's management take the company public in 2003 with the sale of 22 million shares at an opening sale price of $9.25. Company founders Tim McGinn and Tom Few were forced off the IASG board in 2006 and their attempt to buy the company back was unsuccessful.
IASG monitors about 745,000 burglar and fire alarm contracts for 9,000 dealers around the country, and has alarm monitoring stations in New Jersey, Minnesota and California. In November, the company reported 3Q losses of $65 million, a 16.3 percent attrition rate, and a six percent drop in revenue. After the merger is completed, the IASG name will vanish and the Albany headquarters will also close down.
Charles "Chick" May, outgoing chief operating officer at IASG, said that the merger made "a hell of a lot of sense," and "the right partner is one who brings strengths to your weaknesses, I believe Pro One is an exceptional partner for IASG." When asked if IASG stockholders were given good value for their stock, Reinhart, said, "I think they have very good potential going forward."
Pro One's merger offer was more attractive to IASG than other offers because "the combination of the resources is very complementary," said Reinhart.
Michael Barnes of Barnes & Associates consulted on the deal: "By virtue of the stock exchange structure, this deal allows IASG's shareholders to participate in the benefits of the combination, and substantially improve the risk-reward profile of their investment."
Richard Ginsburg, president and chief operating officer of Protection One, said, "Being affiliated with a company that has monitoring centers across the country will enable the wholesale dealer to compete with the likes of Brink's and ADT." In addition, "Criticom [still IASG's primary business] is mainly in the West and the East and our business is mainly in the Southeast ... it fits nicely."
IASG announced Jan. 9 that Michael Moscinski, chief financial officer since 2003, will receive a $450,000 bonus subsequent to the merger. Charles "Chick" May, interim CEO since May of last year, will receive a bonus of $105,000 after the merger.