Tyco acquires Westfire
NEUHAUSEN, Switzerland—Tyco’s acquisition of fire protection company Westfire, announced this morning, “aligns well with the company’s internal strengths,” Jeff Kessler, managing director of institutional research at Imperial Capital, told Security Systems News.
SimplexGrinnell, a Tyco business, hailed the acquisition, saying it will “strengthen SimplexGrinnell’s ability to meet the special hazards fire protection needs of customers in the mining, telecommunications, energy and data storage industries.”
Westfire, which has offices in Arizona, Colorado, Texas, Utah and Washington and also has operations in Chile and Peru, is an $80 million company that “provides critical special-hazard suppression and detection applications in mining, telecommunications and other vertical markets,” according to Tyco. Westfire’s services include fire hazard analysis, system design, installation, maintenance and testing.
Given that Tyco’s fire business is “a $4 [billion] or $5 billion business,” the Westfire deal is “really a bolt-on acquisition, with technical and geographical add-ons,” Kessler said.
However, he called Westfire “another feather in Tyco’s quiver,” and predicted that Westfire’s technical capabilities, expertise in mining and geographic reach will help Tyco in its efforts to effectively “bid a total contract, [and get higher margins].”
Kessler said Tyco’s fire and security business has been focused on growth in profit margins and said the company has been successful in “getting value for the contracting bids and walking away from contracts [that will not yield significant margin],” he said.
Kessler said that Tyco recently sold a guard and armored car business in New Zealand and Australia, a business he said is “peripheral to their main business” and used those funds to buy Westfire, “a business that’s right down their alley.”
Bob Chauvin, president of SimplexGrinnell, based in Westminter, Mass., said in a prepared statement: “Westfire’s engineering, installation and service expertise, combined with Tyco SimplexGrinnell’s comprehensive special hazards capabilities, creates an exceptional combination of solutions to help customers throughout North America. In addition, this acquisition expands Tyco’s service capabilities for the mining industry in Chile and provides an entry into the Peruvian market, both of which are important growth markets for Tyco.”
SimplexGrinnell noted that Westfire’s U.S. operations are concentrated in Western states. SimplexGrinnell has more than 100 company-owned and operated offices throughout the nation, including offices serving the territories covered by Westfire.
After Tyco shed its ADT home security and flow control businesses last year, it became a pure-play fire protection and security company, of which SimplexGrinnell is a key part. SimplexGrinnell recently won a new multiyear contract that could generate up to $10 million a year for that business.
Tyco has more than $10 billion in revenue and in excess of 70,000 employees in more than 1,000 locations across 50 countries, according to the company. It serves markets that include commercial, institutional, governmental, retail, industrial, energy, residential and small business.