NAPCO acquires Marks USA

Thursday, August 21, 2008

AMITYVILLE, N.Y.--NAPCO Security Systems, a publicly traded security products manufacturer based here, announced this week the purchase of Marks USA, based just a mile down the road and a maker of locks geared toward the commercial, industrial and institutional markets.
NAPCO, a $65 million company, paid roughly $25 million for the Marks business, which includes the assumption of current liabilities. The purchase price is roughly equivalent to Marks' current annual revenue and is about 8x its net income.
NAPCO chief executive officer Richard Soloway said the Marks product line, with the largest selection of "Grade 1" locks in the field, nicely complements NAPCO's current product line.
"Their strong point is the commercial and industrial markets," he said, "which is where the money is being made in the United States ... With our ability to create electronics, you'll see amazing products coming out, such as remote-control locks. Now you'll be able to control everything that goes on in a door in simple but sophisticated ways."
He also emphasized that the companies have different channels, with Marks going to market through locksmiths and contract hardware, where NAPCO doesn't currently play. Further, Marks specializes in the U.S. market, while NAPCO exports 20 percent of its sales.
George Marks, Marks USA founder and president, will remain with the company, and Marks USA will operate as an independent subsidiary of NAPCO. However, said Soloway, this is NAPCO's third acquisition, following AlarmLock and Continental Access, so "we know how to integrate and make the combination more powerful than the individual companies."
He said he's particularly interested in what comes out of the combined engineering departments. NAPCO currently spends roughly seven percent of its revenue on research and development, and Soloway said the company will continue that level of spending going forward.