UTC to buy Initial Electronic Security Group
LONDON and HARTFORD, Conn.--UTC Fire & Security has made another major play in establishing itself in the electronic security integration and installation market, with an agreement to purchase the Initial Electronic Security Group from Rentokil Initial for $1.16 billion.
Rentokil Initial began a strategic review of its electronic security business, which brought in roughly $500 million in 2006 revenue, in November of last year. The review was conducted by UK investment firm Greenhill, though the results were not publicly announced. Upon announcement of UTC's offer, March 30, for its electronic security business, Rentokil chief executive officer Doug Flynn said in a statement that the company would now focus on businesses where it can take a market-leading position, such as pest control and parcel delivery.
Rentokil last year already divested itself of its remaining guard services division, the U.S. and Canadian portions of which were sold off to AlliedBarton and Garda, respectively. UTC estimated that its own continuing guard operations in the UK and Australia generate $550 million in annual revenue, but is looking to divest itself of the guarding operations to focus on electronic security installation.
UTC has actively been looking to increase its position in security integration. Most recently, UTC purchased North American integrator Red Hawk Industries for more than $100 million, in late 2006. With this Initial acquisition, UTC will pick up companies operating in the UK (Initial Fire & Security), France (Varel), Netherlands (Delta), and the United States (Initial Electronics). UTC also owns Chubb, an integrator based in the UK.
Initial Electronics, itself, has been active in the United States. The company has acquired NTC Electronics, ISS, Video Master and Barry Security since 2003. Initial Electronics president Kevin Robison said in a statement that he looked forward to working for a bigger company "with a more defined focus on security."
Both UTC and Rentokil Initial declined comment on the deal, citing a wait for regulatory approval in four countries. Closing is expected in late June.
For more on this story, see the May issue of Security Systems News.