Securitas splits into four
STOCKHOLM, Sweden--In a move hailed by stock analysts, Swedish security firm Securitas AB has announced plans to spin-off three independent companies, with separate boards, management and stock listings: Securitas Systems, focusing on systems integration in Europe and North America; Securitas Direct, an alarm company serving the European market; and Loomis Cash Handling, which operates in Europe and North America.
An excited Securitas Systems chief operating officer Marty Guay said the move made sense because "we have sufficient maturity in our management team and business controls that we're prepared to stand alone--and the market agrees with us."
Bob McCrie, a professor of security management at John Jay College and the publisher of Security Letter, said that while it might have appeared that Securitas could capitalize on having an enviable combination of guarding and electronic security, "it's been tried before and it hasn't worked." He noted the now "almost forgotten" company Baker Industries, which "was an example of a company that did guarding, alarms, and armored cars. Though it seemed to make sense, in actuality these businesses were so different that there wasn't much synergy between them."
He noted that the systems integration side of Securitas would have been actively marketing their products as a way to reduce guarding needs. That's obviously counterproductive.
"The divisions had reached a sufficient size and a level of specialization within each market," said Guay. "To keep the advantages we had, independence was important for us. Right now guarding is the engine of [Securitas AB]. We started the [systems integration] specialization in 2001 ... We were $250 million then, today we're closer to about a $900 million entity. But we were still a tech group inside of a guarding company. We know customers need specialization and knowledge."
Industry history buffs will remember that both guard firm Group 4 Securicor and access control giant Assa Abloy were once Securitas companies. Both are now multi-billion-dollar entities.
Guay said Securitas Systems will now focus on growing its U.S. business, which makes up about 15 percent of overall sales. He said they'll specialize in specific markets. Right now they have distinct retail and banking divisions and Guay said they're looking at specializing in the medical industry as well.
"What they're looking for," Guay continued, "is for us to develop solutions that are specific to their market and business, at a reduced cost and a return that they can help minimize their risk."
In terms of growth, Guay said it will be a mix of organic and acquisitions, which will be "characterized by companies that are growing with new ideas and technology, with a clear market focus. In some areas we'll be looking for footprints, and sometimes they're specializing in specific verticals." He said the 2005 purchase of Hamilton Pacific, which focuses on the financial market, was an example of the latter. Last year's purchase of Wornall Electronics, based in Kansas City and New Jersey, was an example of the former.
"We're buying people and how they've organized their business," Guay said. "The people are extremely important in the acquisition."