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Stanley Black & Decker

Once IR spins off security division, will others follow?

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Wednesday, June 12, 2013

Once IR spins off its security division, will others follow? Poking around some investor conference info recently, I came across this tidbit on Seeking Alpha

“Stanley Black & Decker Chairman John Lundgren made an interesting revelation during his chat at the Electrical Products Group Conference yesterday. [The conference took place in late May]. The exec says the company will keep an eye on the spinoff from Ingersoll Rand of its security business to see if a similar move would make sense for SWK with its security business. On strategy: "Because if we are convinced a year or two years from now that we have got a 12x EBITDA business trapped in a 7 or 8x business, we will make it bigger."

Through my Stanley contacts, I asked Brett D. Bontrager, SVP and Group Executive, Stanley Security Solutions, for further comment on Lundgren’s statement. Bontrager declined comment saying that there was nothing more to say beyond what John Lundgren stated.

You may recall that Ingersoll Rand announced in December that it would spin off its security products business.  Here’s my story. The IR security business—which includes brands such as Schlage locks and other electronic and biometric access control products—will be a $2 billion company once it is spun off. The remaining IR business will be a $12 billion business.

Following the IR spinoff announcement, reports, such as this one from Bloomberg, speculated that the new standalone IR security company will present an acquisition target. This report said potential acquirers include Stanley Black & Decker (to add to its security businesses and further diversify from its power tools), Tyco (might be interested in IR’s commercial products but not its resi security products) and UTC. The report also notes that IR, which is headquartered in Swords, Ireland, presents certain tax advantages.

The IR spinoff was prompted by activist shareholder Nelson Peltz, whose Trian Fund Management owns about 7.3 percent of IR stock.

During ISC West, IR announced that Patrick Shannon will serve as senior VP and CFO of the new security spinoff and Barbara Santoro will serve as SVP and general counsel. They will report to the CEO, who has yet to be named.

ISC West Day 2: A new look at locks, and at home with radar

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Thursday, April 11, 2013

My second day at ISC West—Wednesday—was the first day the show floor opened. And among other things I learned from my visits to various booths was how to view locks from a new perspective.

For example, at the Kwikset booth, Stanley Black & Decker national account manager Brian Willis told me that as dealers work to convince homeowners to add home automation features to their security systems, “a lock is that transition piece.”  Kwikset is part of the Hardware and Home Improvement Group of Stanley Black & Decker.

The door locks that the California-based manufacturer makes serve as a bridge to home automation. For example, one of the many features of the 2nd Generation SmartCode deadbolt lock with Home Connect technology that Kwikset introduced at the show on Wednesday is its ability to integrate with home security and automation systems.

That means the lock can communicate with other wireless products in the home. For instance, Willis said, the lock can be set up so that if a smoke alarm in the house goes off, the door will automatically unlock. As Keith Brandon,Stanley Black & Decker director of residential access solutions, put it, such features “add value to consumers and dealers.”

Not surprisingly, ASSA ABLOY, a Sweden-based door opening solutions company, also was talking locks—a lot of them.

Martin Huddart, executive VP and CEO, said the company has launched 280 new products in the last three years. He said that typically 95 percent of a building’s doors require mechanical locks because they are low-risk entry points and 5 percent of the doors are high risk, so require more expensive access control.

But Huddart said ASSA ABLOY also has solutions for medium-risk entry points and he urged integrators to explore with their customers “matching the right level of technology with the risk.” He estimated about 15 percent of a building’s entry points might require those medium solutions.

Another highlight of my day was learning about a new form of residential security: radar. That’s the latest development from SpotterRF, which makes compact radar systems for military and commercial markets—and now for the residential market. SpotterRF, a company established in 2009 that has offices in Herndon, Va. and Orem, Utah, announced at ISC West that it has installed radar security at a luxury estate.

CEO Logan Harris told me that he can’t reveal much about the client for privacy reasons, but he said he believes the job was the first of more to come in the high-end luxury market. Installed was a 100-acre, 360-degree perimeter security system in just one day that cost about $12,000, he said.

Harris said that radar “gives you the capability of sticking on GPS tracker on someone without their actually knowing anything about it.”

Stanley execs talk about progress on Niscayah acquisition

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Monday, January 30, 2012

Stanley CSS’s parent company, Stanley Black & Decker exceeded Wall Street expectations last week with its earnings announcement.  It had Q4 revenue of $2.8b, up 17 percent over 2010 Q4 revenues, and organic revenue growth was up 6 percent over the same period.

The security segment was up 1 one percent with 4 percent organic growth in Convergent Security, according to the conference call. Security has Q4 sales of $827 million. That revenue figure is up 49 percent over last year (2010 Q4 revenues were $555m) —with most of the growth attributed to the acquisition of Niscayah.  Total 2011 Q4 sales for security were $2.6 billion compared to $2 billion in 2011.

With the Niscayah acquisition, “security makes up 30 percent of company revenues—up 23 percent from a year ago … Security segment profit was $129 million, up 37 percent and their profit rate increased to 18.5 percent, excluding acquisitions. The increase was driven by strong price inflation recovery, acquisition synergies and ongoing productivity initiatives,” Stanley Black & Decker CEO John Lundgren said in the conference call.

He said Stanley is still expecting to realize $45 million in cost synergies from the purchase of Niscayah. “It’s going to drive about $0.20 of accretion and about $35 million more in synergies in 2013. That’s the $80 million that we projected upon announcement of the acquisition.”

In terms of personnel changes as the result of the acquisition, Lundgren said: “Major upgrades to leadership are complete.” He said that acquisition brought with it “terrific strength in field tech and field sales and installation, both in Europe and the U.S. …so it’s a nice upgrade with the combined team.”

This quarter security’s “installation sales were up 12 percent globally, with monitoring RMR of 3 percent with a positive outlook,” Lundgren said. He noted the Niscayah’s operating margin rate “will continue to improve …but that it will continue to be a drag on the entire segment in 2012.”

Talking about the Niscayah integration, James M. Loree, Stanley Black & Decker COO, said Stanley is following the “HSM model … so that you have a nice blend of central oversight with the local regional management . And that’s going to take about 3 years to fully implement.” Stanley bought HSM in 2007 for $545 million.

Lundgren added: “we’ve seen the NIscayah model before, good business, too much installation, not enough recurring. We know what to do with that. And, Oh, by the wsy, we have a history with security acquisitions of improving margings uip to 400 to 1,000 basis points within two to three years … we’ve seen nothing [since announcing the acquisition] that would lead us to back off from that.”

Lundgren also pointed out two Niscayah strengths that Stanley will adopt and implement. He said Niscayah “is very good at recurring service revenue … maintenance, scheduled maintenance, prepaid maintenance …” and  “excellent talent” in “vertical market prowess .. particularly in financial services.”

Direct quotes are courtesy of www.SeekingAlpha.com.

Stanley to close Niscayah deal tomorrow

Byerly: ‘Expect to see visible steps soon.’
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09/08/2011

STOCKHOLM—Stanley Black & Decker executives are here today preparing for the Sept. 9 closing of its $1.2 billion cash offer purchase of Niscayah.

Stanley to buy resi company for $61m

Purchase expected to close in September
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08/04/2011

EDMONTON, Alberta—In a deal that will give Stanley CSS a major residential security footprint in Canada, Stanley Canada Corporation, a subsidiary of Stanley Black & Decker, Inc. has entered into an agreement to acquire Microtec Security Systems, headquartered here, for $61.6 million ($59.7 million Canadian).
The deal includes close to 80,000 accounts, two UL-Canada listed central stations, five offices, 200 employees and many dealers, said Fred Fong, CEO and president of First National AlarmCap Income Fund, owner of Microtec.

Securitas extends time frame for offer

Says extended offer not related to Stanley’s rival offer
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07/07/2011

STOCKHOLM, Sweden—Securitas has extended the time frame for its offer to buy Niscayah from July 18 to August 12, but—despite rumors to the contrary—it will not raise its $907 million bid, Gisela Lindstrand, senior vice president corporate communications and public affairs told Security Systems News on July 6.

Kessler on the Stanley/Niscayah numbers

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06/30/2011

NEW YORK—Stanley Black & Decker definitely upped the ante with its bid, announced this week, for Niscayah. It’s a bid that’s been called generous by some, but is Stanley offering a premium price?

Stanley makes $1.2 billion cash bid for Niscayah

Securitas/Niscayah reunion not looking so imminent
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06/27/2011

NEW BRITAIN, Conn.—Stanley Black & Decker, parent company of Stanley CSS, announced today 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 today that it unanimously recommends that shareholders accept the public offer.