Johnson Controls to sell JCSS to Versar for $20m

SPRINGFIELD, Va.—Johnson Controls (JCI), which has shed a number of businesses in recent months, on Sept. 4 signed an agreement to sell its specialized federal security integration business, called Johnson Controls Security Systems (JCSS), to Versar, a government-services business located here, for $20 million.

The deal is expected to close by Oct. 1, according to Michael McManus, Imperial Capital managing director. Imperial Capital advised JCI on the deal. JSCC has approximately 50 employees. �

JCI has refined its business focus in the past 12-18 months, and this deal is part of that strategy, McManus said. “JCI has done a number of divestitures and one or two acquisitions to take them more deeply into the manufacturing and building controls.”

JCI still has a large security integration business that does about $300 million in business annually. “They still consider security integration to be core to them because its goes well with building controls, but JCSS was set off in its own silo at JCI,” McManus explained.

Based in Gaithersburg, Md., JCSS is CAS-compliant—a government designation that means it's “set up really to do only government work and really only federal government work. The client it's best known for is the FAA,” McManus said.

JCSS does access control, video and some perimeter work, “but it didn't do HVAC, so it was considered non-core to the refined manufacturing and building-control focus of Johnson Controls,” McManus said.

Versar is a “better home” for JCSS, because it's a “smaller company [than JCI] with extensive government contracting expertise. They should help grow JCSS,” he said.

Versar does “difficult projects in difficult places,” McManus said. And, JSCC “does security integration for clients like the FAA, which fall into the same category.”

In a prepared statement, Versar CEO Tony Otten called JCSS “a great strategic fit for Versar, extending our client base, and enabling us to offer additional products and services to our existing clients.” Otten said Versar want to use its “service capabilities to generate more work with our existing clients and to more effectively compete for new customers and projects.”