PE firm wants to combine Protection 1 and ASG

Deal reportedly $2b, multiple would be higher than 50x
Tuesday, May 12, 2015

NEW YORK—Apollo Global Management, a $163 billion private equity group, is in talks to acquire Protection 1 and ASG, with the goal of combining the two companies, a source close to the deal told Security Systems News.

Nothing has been finalized in the deal, the source said. Final bids for ASG were due May 11. “Two viable parties, one of which is Apollo,” are bidding on ASG, the source said.

“Apollo Global Management is one of the top three largest private equity funds today in the world,” the source said. This would be Apollo’s first investment in a security platform. ASG and Protection 1 are two of the largest security companies in North America, “clearly [Apollo] has very ambitious plans,” the source said.

The deal is expected to be resolved in the next week. Rueters reported that the deal is valued at $2 billion.

Imperial Capital’s Jeff Kessler said “simply based on information from the Reuters report, if the deal is indeed $2 billion, the multiple would be higher than 50x. … It’s a big deal.”

ASG Security, a super-regional based in Beltsville, Md., had $10 million in RMR in 2014 and gross revenues of $145.8 million. It does residential and small commercial, as well as high-end enterprise and government work.

Protection 1, based in Romeoville, Ill., had $29.7 million in RMR in 2014 and $468 million in gross revenue. Its customers include residential, commercial and national accounts and multi-family residences. It also owns CMS, which is a wholesale monitoring company. GTCR, a Chicago-based private equity firm, bought Protection 1 in 2010 for $828 million. News of Protection 1 being for sale surfaced in August 2014.

Kessler called ASG and Protection 1 “highly complementary” businesses that together could “compete better for a number of things in the marketplace.” 

Together ASG and Protection 1 “would create a company that [in terms of revenue] would be just below Vivint and Montronics, but it would be a much more diverse company than either,” Kessler said.

Private equity likes security, Kessler said, because “the RMR, debt side of the business has been extremely successful for the PE investor and for the senior lending banks. The public equity investors are still trying to learn the key metrics that drive the business."

Calls and emails to Protection 1, ASG and Apollo were not immediately returned.