Securitas ends discussions with Chubb

The world-wide security giant made a move for the U.K. rival security company
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Saturday, June 1, 2002

STOCKHOLM-Securitas AB, the Swedish security firm known for buying American security companies Pinkerton's Inc. and Burns International, halted preliminary talks with rival company Chubb Plc. in the middle of May.

Had talks progressed and a deal been reached for Securitas to buy Chubb, it would have furthered the security Goliath's international presence. Chubb is a global provider of security and fire equipment with a North American installation and monitoring arm. Last summer Chubb bought A-Link USA and Alarm Processing Corp. for $50 million combined.

"It's definitely not another U.S. play," said Jack Mallon, a security analyst with Mallon & Associates. The deal, he speculated, was more for Chubb's reach in the global market.

Industry analysts say the deal fell apart due to price. Shares of Chubb stock soared 15 percent upon word that the two companies had engaged in talks, but the increase was short lived. Chubb, which has a market value of $2.2 billion, saw its stock tumble 17 percent after merger talks ended, while Securitas' posted a six percent gain.

For Securitas to buy Chubb, it had to sell new stock to finance the deal, even though it is valued at more than $6 billion.

Sophie Hoggarth, a spokesperson at Chubb Plc. in London, declined to comment further than a company issued press release.

In the release, Chubb said its board of directors was notified by Securitas that "it no longer wishes to continue preliminary discussions concerning a business combination. These discussions have therefore ceased."

Securitas officials were unavailable for comment by press time.

"Both parties have come to the conclusion that although there are obvious synergies between the two companies, it has not been possible to reach an agreement that is financially attractive," according to a Securitas AB issued press release.

Securitas, however, intends to have discussions with "companies in the industry concerning potential cooperations and acquisitions."