Purchase price released for AlliedBarton

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07/29/2008
According to this Reuters article, the Blackstone Group will pay $750 million for AlliedBarton. Further: The purchase price for AlliedBarton includes a maximum potential earn-out payment of $50 million, based on the company achieving certain profit targets for 2009, AlliedBarton said in a U.S. Securities and Exchange Commission filing. The agreement can be terminated under certain circumstances, including if the merger does not occur by October 10, it said. But the companies expect the acquisition to close in August. The deal, which was announced last week, while not comparable to the mega-billion-dollar buyouts of a year ago, was noteworthy amid a dearth of private equity buyouts. For some reason, I can't find that filing. Usually Yahoo has a link to at least the summary, but it's not there. Either way, I think this is good news for the security industry in general. In a time when deals are not happening, people are willing to finance security deals and take chances on the security industry in general. That can't be bad. As for the price tag, if this New York Times blurb is right, Blackstone is paying about .5 trailing revenues, considering AlliedBarton pulled in about $1.5 billion last year. It's not a bad deal for the previous owners, MacAndrews & Forbes Holdings. According to the Times, they paid $263 million for AlliedBarton in 2003, so they saw a good return, even considering the purchase of Initial's guarding properties in the meantime. Another interesting thing to think about: Consider that AlliedBarton employs 52,000 and generated $1.5 billion. So, they're only generating $28,846 per employee? Wow. Talk about thin margins. How does that business model work for an equity firm that wants to slim things down even more and pull out profits?