Questions and answers on UTC's GE Security buy

Now that the deal has closed, UTC execs are ready to talk
 - 
Thursday, March 4, 2010

HARTFORD, Conn.—After raising $2.25 billion last week, UTC closed quickly on its announced purchase of GE Security. With everything a done deal, SSN editors were quick to forward over questions about the future for GE Security’s dealers and products.

With everyone busy making plans for ISC West and how to integrate the large GE Security operation with UTC Fire & Security, there wasn’t time to get a bunch of executives on the phone. Thus, we gathered responses via email, and you can attribute the answers to “a company spokesperson.” Further, there is a micro-site set up by UTC Fire & Security that includes a letter to GE dealers from UTCFS president William Brown and answers many questions about branding (they’ve licensed the GE Security brand for at least three years, and as many as 10 years), focus of UTC, and other matters.

Q: Who from the GE Security executive team is staying on? Is Dean Seavers staying on?

A: With the acquisition of GE Security, UTC Fire & Security has assembled an outstanding leadership team with the experience to guide the combined company to our goal of being the best in the industry.

The former GE Security executives joining the leadership team are impressive, and bring a depth of both industry and business process knowledge to complement our existing team.

The new UTC Fire & Security leadership organizational structure includes three P&Ls led by:

• Dean Seavers, former president GE Security, appointed president, Global Fire & Security Services responsible for the service and installation businesses globally.

• Scott Buckhout, continues as president, Global Fire Products including GE Security’s fire detection and alarm business.

• Mark Barry, former president GE Security Americas, becomes president, Global Security Products Group representing sales of access control, intrusion, video, key and lock products/solutions.

All three positions report directly to William Brown, president UTC Fire & Security.

Q: What was your main message to current GE Security dealers? Their main concern?

A: Our main message to our residential channel is that UTCFS is excited about the residential intrusion product line and the strength of the channel partners. UTCFS intends to remain a leader in residential intrusion and has no plans to back away from this segment.

We have a substantial residential business in fire safety through Kidde where we make smoke and CO alarms, and we like this business a lot.

Q: How many GE Security dealers are there? What does UTC have to offer these dealers that they did not have before? Do you intend to expand/change the program? How?

A: GE Security brought strong relationships with thousands of security dealers across the world and UTCFS’ goal is to preserve all customer relationships. We don’t anticipate any changes to the residential dealership, the sales representative structure or any channel relationships.

Q:UTC has the rights to retain the GE Security brand for three years, what is the royalty arrangement for that right?

A: UTCFS has licensed the rights to use “GE” and the GE monogram on products for various periods of time, depending on the business segment—10 years for Global Video and US residential intrusion and three years from everything else. UTCFS recognizes the importance of brands and will ensure that across the combined businesses brand value is preserved both in the short- and long-term.

Q: How important is the GE brand to UTC? To GE dealers?

A: UTCFS believes that GES brought a strong portfolio of products and brands that customers recognize and value that has been a key part of their success. To protect that value UTCFS has licensed use of the “GE” and the GE monogram. (as per above). UTCFS is excited about the strength of GE Security’s many brands including EST, Aritech, Ziton, Kilsen, FCWnx, Casi Rusco, Supra, among others. UTCFS also owns many strong brands such as Kidde, Lenel, Chubb, Onity and others.

Our goal is to manage the integration smoothly and protect the value inherent in the existing relationships built with dealers over the years.

Q: How will things change for GE Security fire dealers? Will they be dealing with the same sales people as before, for example?

A: It’s business as usual for the fire dealers and they will continue their existing relationships with the same sales people. Channel partners will be called upon by the same sales-people that they were dealing with before acquisition.

UTCFS operates its service/integrator businesses separate from its product businesses and will continue to do so. In fact today most of UTCFS’ product sales today go through third parties.

Q: Does Red Hawk expect to leverage new relationships with people at GE Security? How?

A: UTCFS manages its product businesses separate from its service/installation businesses. We believe this approach works well and don’t intend to change it. Red Hawk will continue to buy products that best meet the needs of its customers.

Q:. How much overlap is there between GE's products and UTC's? Is there anything that's redundant and will be discontinued? Merged?

A: The acquisition brings together complementary portfolios with strengths in different technologies and different geographies. For example, GES has brought UL-approved products in North America that fill important product gaps in the UTCFS offering. On the security side, the GES Video, Intrusion and Access portfolio will build scale and complement Lenel’s leadership in enterprise software and Onity’s capabilities in electronic locks.

The GES product roadmap is part of the inherent value that UTCFS places on GES. New product development plans are critical to the growth of the combined entity. UTCFS intends to continue to offer customers a broad portfolio of brands that meet their specific requirements.

It is UTCFS’ intention to continue to invest in these products with obvious consideration to normal product lifecycles and evaluation of product portfolio of both organizations. Part of our integration process is ensuring collaboration within the newly combined business to develop these important product strategies.

Q: Many readers are concerned about the future of the MAS central station automation software business. They base their entire operations on it, and it's already been sold twice in the span of about five years. How does UTCFS view this portion of the industry, how does it see MAS’ standing in the marketplace, and what will be done with the product in the near future?

A: UTC Fire & Security (UTCFS) intends to maintain the current stand-alone nature of the MAS operation. UTCFS will manage and support the MASterMind platform separate from its service businesses. It’s a bit soon to comment on specific products introductions but you will hear more about the solutions we will be introducing to help our customers grow their business and improve operational efficiencies.