Sonitrol is sold, three investors pick it up

Friday, April 1, 2005

ALEXANDRIA, Va. - After several months of anticipation, Tyco International announced this week that it sold its Sonitrol Corp. security business to a trio of private equity firms for $125.5 million.

Wachovia Capital Partners, Carlyle Venture Partners and Spire Capital Partners teamed up for the acquisition. Wachovia and Carlyle have made previous investments in the alarm industry, but this deal marks Spire Capital's first purchase in the security market.

Sonitrol appealed to the three firms because of its strong brand name, national presence and low rate of attrition, said Chris Paldino, senior associate with Spire Capital in Washington.

Sonitrol, which has been in business for 40 years, is a franchise alarm business that reported $80 million in revenue in fiscal 2003. It has more than 170 locations across the country, with about 25 of those owned by the company itself.

But unlike other alarm companies that sell and install security systems, Sonitrol sets itself apart from by offering a one-way audio system that allows the central station to hear what is happening after an alarm sounds.

Todd Leggett, senior vice president of franchise operations for Sonitrol, expects the company will grow its franchise operations under the new owners. "We have not had an aggressive campaign to find franchisees," he said. "We will look at locations that we did not proactively go to, cities like Milwaukee and Cleveland.

The sale of Sonitrol is part of Tyco's plan to sell off more than 50 small business, with about half of those expected to come from its fire and security businesses worldwide. This deal marks Tyco's first sale of a North American fire and security business.

"One of the things we're trying to do when we divest of the 50 businesses is to tighten the focus of Tyco," said Gwen Fisher, spokesperson for Tyco. "While Sonitrol is a good business, because in many ways it competed in the same markets as ADT it made sense to go ahead and put it out for sale."