Security

Halma Acquisition Strategy: Fire & Security Businesses in High-Value Niche Markets

This article was written by Daphne Tomlinson, Senior Research Associate at Memoori. Halma Infrastructure Safety Sector, one of four sectors of UK listed company, Halma plc, protects commercial, industrial and public buildings through fire safety systems and sensors for security, elevator safety and access control. Sector strategy is to grow and acquire businesses in high-value niche markets with high barriers to entry and with global reach in selected market areas of fire and security, according to the Halma Infrastructure Safety Sector Capital Markets Day presentation on 5th March 2020. Established through the acquisitions of Apollo Fire Detectors, Advanced Electronics, FFE and Firetrace businesses, the sector benefits from a long-term focus on the fire detection market, with a strong presence in the UK and Europe. The Fire sub-sector is the largest business area accounting for around 50% of FY2019 Sector revenues of £409 million. The sector has three further sub-sectors; Security and Elevator Safety account for […]

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This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.

Halma Infrastructure Safety Sector, one of four sectors of UK listed company, Halma plc, protects commercial, industrial and public buildings through fire safety systems and sensors for security, elevator safety and access control.

Sector strategy is to grow and acquire businesses in high-value niche markets with high barriers to entry and with global reach in selected market areas of fire and security, according to the Halma Infrastructure Safety Sector Capital Markets Day presentation on 5th March 2020.

Established through the acquisitions of Apollo Fire Detectors, Advanced Electronics, FFE and Firetrace businesses, the sector benefits from a long-term focus on the fire detection market, with a strong presence in the UK and Europe. The Fire sub-sector is the largest business area accounting for around 50% of FY2019 Sector revenues of £409 million. The sector has three further sub-sectors; Security and Elevator Safety account for a further 25% of revenues and the People and Vehicle Flow sub-sector is a focused growth area of around the same size.

Apollo was acquired in 1983 for £600k (£2m in today’s values allowing for inflation). Today, Apollo has well over £120m revenue and well over 20% return on sales, one of the best investments Halma has ever made, according to Paul Simmons, Sector Chief Executive.

Halma’s regional presence in the fire detection, security and emergency communications markets has been expanded in the last 4 years through acquisitions in Europe, Australasia and North America.

In the fire safety market, 5 acquisitions have been completed:

  • In January 2020, Halma acquired 70% of FireMate Software Pty. Ltd., a Brisbane, Australia-based company which provides cloud-based fire protection maintenance software to fire contractors, for a cash consideration of A$18.2 million (£9.5 million). FireMate's software solutions are complementary to those currently offered by the Infrastructure Safety sector's fire businesses and further strengthens their capabilities in connected and integrated fire systems internationally.
  • In June 2019, Ampac was acquired for a cash consideration of A$135 million (£74 million) on a cash and debt free basis. The deal strengthens Halma’s fire detection presence in Australasia. Ampac brings strong brand equity, robust technology and established routes to market. Its fire detection systems are complementary to Halma’s portfolio of fire companies, and its voice evacuation panels, sounders and beacons will help extend the intellectual property of the business. The acquisition supports their strategy of growing geographic footprint and increasing their fire system offering.
  • In October 2018, Belgian-based Limotec was acquired for a cash consideration of €9.3m (£8.2m), on a cash and debt-free basis. The transaction expands Halma’s presence in the fire control panel manufacturing and fire detection systems market in Continental Europe.
  • In September 2018, LAN Control Systems, a fire compliance and software company based in Nottingham, UK, was acquired for an initial cash consideration of £1.0m. The deal expands Halma’s cloud-based remote monitoring system capabilities and supports tighter integration between fire, security and other building systems. The addition of LAN Controls brings new connected technology capability.
  • In December 2017, Halma acquired Argus Security S.r.l., based in Trieste, Italy, a leading manufacturer of wireless fire systems, including detectors, call points, sounders, beacons and modules and its UK‐based distributor Sterling Safety Systems Limited, the exclusive distributor of Argus wireless devices into the UK market under the Hyfire brand. The combined cash consideration was £21 million on a cash and debt‐free basis. The combined transaction strengthens the wireless fire detection segment.

In the emergency communications market, Rath Communications based in Wisconsin, USA was acquired for a cash consideration of US$42.4m (£32.6m), on a cash and debt-free basis in January 2019. The deal strengthened Halma’s presence in the niche market of emergency communications in Areas of Refuge in the USA. An Area of Refuge (AOR) is a location in a building designed to hold occupants during a fire or other emergency, when evacuation may not be safe or possible. Rath is a provider of Area of Refuge communications, enabling disabled and elderly people to call for help from multi‐storey buildings, elevator phones and public safety phones. Rath has also recently entered the growing market for bedside communication systems in nursing homes with its Nurse Call products.

In the perimeter security market, Navtech Radar, a provider of innovative radar surveillance and safety solutions for use in highway monitoring, perimeter security and industrial applications based in Wantage, UK, was acquired for an initial cash consideration of £21m on a cash and debt-free basis, with further earn-out considerations, capped at a total of £18m in cash. The acquisition in November 2018 provided new opportunities in radar technology for perimeter security in critical infrastructure markets, such as airports.

In the in-building location systems market, Halma acquired Centrak, based in Newtown, Pennsylvania, USA for a cash consideration is $140 million (£95.9 million) in February 2016. Although the company is part of Halma’s Medical sector, rather than the Infrastructure Safety sector, the business enables the digitalization of healthcare facilities with its real-time monitoring of a range of parameters including patient, staff and medical equipment location, patient security, hand hygiene compliance and environmental/temperature conditions.

Further details of the above-mentioned transactions can be found in our Smart Building Deal Tracking service published in January 2020: M&A and Investments in Smart Buildings.

Halma has acquired a strong technology portfolio addressing smart buildings over recent years and their fire and security businesses are well placed to take advantage of digital innovation across the commercial buildings space.

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