Stanley makes $1.2 billion cash bid for Niscayah

Securitas/Niscayah reunion not looking so imminent
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Monday, June 27, 2011

NEW BRITAIN, Conn.—Stanley Black & Decker, parent company of Stanley CSS, announced June 27 that it made a $1.2 billion all-cash bid for commercial security integrator and monitoring company Niscayah. The bid is supported by the Niscayah board of directors, which announced it unanimously recommends that shareholders accept the public offer.

The $1.2 billion offering price is higher than the $907 million stock bid made by guarding giant Securitas, which is based in Sweden and is the former parent company of Niscayah, on May 16.

Stanley would pay for the acquisition with “trapped cash,” that is offshore cash, so the company would not issue any debt or equity to complete the transaction. The bid represents 31x RMR and about 14.2 x EBITDA. Stanley says the deal will be immediately accretive and estimates the post synergy purchase price will be 7.2x EBITDA.

“Today we have a strong business in France and a growing business in the U.K. that focuses on commercial customers,” Brett Bontranger, Stanley SVP and group executive for Stanley CSS, told Security Systems News. “The businesses in France and the U.K are standardized to the business processes and data systems we have in the U.S., so we can provide customers with a global solution. If the Niscayah transaction happens, it will put us in a position where we can offer end users a global solution in many more regions.”

Niscayah’s revenue is split up geographically in the following way: Nordic region-34 percent; rest of Europe-33 percent; United States-15 percent; France-9 percent; rest of world-9 percent.

Asked about the integration of the two companies in North America, Bontranger said the bid represents a “great opportunity to bring two companies together in North America. We’re in markets in North America where Niscayah doesn’t have a physical presence and there’s an opportunity for us to pick up new markets as well. In addition, they have a presence in certain vertical markets, in particular, financial services, where we do not have a large presence.”

Similarly, Stanley CSS will help Niscayah to expand into verticals where it has a large presence, such as education, health care, retail, government and commercial/industrial.

Imperial Capital’s John Mack said the deal makes “strategic sense, as Stanley grows its presence in the European market and its stated intention to grow the security business worldwide.” In addition, it should “be a good fit given the high recurring revenue component Niscayah would bring,” he said.

Stanley expanded its security operations into the U.K and France in recent years.

Niscayah has annual revenue of $1 billion, according to Stanley, while Stanley’s CSS business does about $800 million, $300 million of which comes from its European operations. Stanley estimates it would achieve  $80 million in annual cost savings as a result of the transaction, “more than half of which would be realized by the end of year one after closing.”

The deal is expected to be “immediately accretive to Stanley Black & Decker earnings per share with accretion of USD $.20 in year one and USD $.45 by year three,” according to a Stanley release.

The deal is subject to anti-trust approval and other customary conditions. It is expected to close in September 2011, according to the Stanley statement.

Will Securitas come back with another offer? That remains to be seen, but Securitas officials said in May that it would not enter into a bidding war with other bidders. According to Reuters and others, spokeswoman Gisela Lindstrand said Securitas' bid still stands, but so does a stance the firm will not enter a bidding war: "That is still the status. We will not do that.”