Stanley’s toolbox to grow, Frisco Bay is its latest target

Sunday, February 1, 2004

ST. LAURENT, Quebec - Canadian systems integrator Frisco Bay Industries perhaps stunned the security market with news in January that Stanley Works has offered to buy the business for approximately $45.3 million.

If approved by shareholders of Frisco Bay, the transaction would mark Stanley Works’ second purchase in the security systems integration business. The tool and hardware manufacturer bought Best Access Systems late in 2002 for $310 million, providing it with a platform to grow in the security market. Not only does Best Access operate a systems integration business, but also it manufactures locking system products.

Vigen Ghazarian, a technology analyst with Sprott Securities in Toronto, said he was somewhat surprised by the announcement. He characterized Frisco Bay as a solid, profitable company with plans to pursue security contracts larger than the ones it has completed in the past.

“The company wanted to bid for larger projects,” said Ghazarian. “Under Stanley Works’ umbrella they will have the name of a larger company and the financial resources.”

Frisco Bay is considered the largest independent systems integrator in Canada. The company operates nine locations and employs 200 people. In fiscal 2003, the company logged $35 million in sales. Its business mirrors that of Diebold since Frisco Bay serves financial institutions providing both financial transaction systems, such as ATMs and currency handling systems and security systems.

The company got its start in the 1970s when Barry Katsof, chairman and chief executive officer of Frisco Bay, began the company along with a business partner. At first, the business provided dummy cameras. It later evolved to offer clients cameras, film and film processing during the days when 16 mm film was the best technology available.

Business began to take off when the Canadian Banker’s Association asked the company to open an office to serve the Vancouver market.

Katsof said that a number of companies have pursued Frisco Bay over the years. “As a public company, people are always knocking on our doors and you have a fiduciary responsibility to sit and listen,” he said.

Besides what’s being considered a fair price, with Stanley Works offering to pay $15.25 per share, Stanley Works also brings to the table significant resources. “They’re a very recognizable, big name in the marketplace and they’re very committed to growing the security sector of their business,” said Katsof.

Tender offer notices were expected to go out to shareholders by early February. Frisco Bay shareholders will then have 35 days to tender their shares. Katsof and Ron Waxman, vice chairman and chief operating officer of Frisco Bay, collectively own 30 percent of the equity shares of Frisco Bay.

USBX Advisory Services LLC advised Frisco Bay’s board of directors on the offer. Officials from Stanley Works could not be reached for comment by press time.