ADT to buy SST, Intercon

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04/14/2008
Well, happy Monday! Just when things were starting to slow down after ISC West, here comes ADT to announce a $187 million acquisition of FirstService's security business (better known as SST in the States and Intercon in Canada). Here's the FirstService announcement, too. It's a "divesture," doncha know. There's a webcast later today where I can ask questions, but on the face of it, it looks like ADT got a pretty good deal. The FirstService businesses apparently reported $200 million in revenue last year, so the $187 million number looks to be under 1x. FirstService has lately been buying in the property management space, so maybe they weren't seeing an upside in security over the long haul or just thought this was a good time to get out. Plus, you'll notice they don't even mention security in their report of 3Q numbers recently (probably because it looks to be only about 10 percent of its business and all the other segments were way up, revenue wise). Here's the spin from FirstService, which seems about right: "The sale of our integrated security services division is a key strategic move by FirstService to intensify our focus as a global provider of diversified real estate services," said Jay Hennick, Founder and Chief Executive Officer of FirstService. "While the future prospects of our security division are excellent, particularly its strong internal growth potential, we concluded that accelerating the growth of our three real estate services platforms through a combination of internal growth and acquisitions would create greater long-term value for the shareholders of FirstService. We are very pleased to have found the right buyer for this highly sought after asset, and are confident that industry leading ADT will take this business to the next level." Also, the FirstService stock is down 33 percent over the past six months, so maybe that had something to do with wanting to shake things up a bit. More later.