Security

UTC / GE Security – Good Sale, Good Buy and More to Come

On 12th November, UTC announced that it had agreed to purchase GE Fire & Security for $1.82 billion which will be the biggest security and safety deal recorded in the last five years. Many column inches have since been written about why this was such a good deal for UTC but in the short term I guess that the GE negotiating team had more to celebrate on the day. In the present economic climate, two years of steeply declining revenues and profits and only one serious buyer for the combined operation, they came out with a good deal. For UTC this is a deal of 2 halves with the old Edwards Fire Detection business being the jewel in the crown and the security business looking as though it needs a serious technology revamp. The fire business fits in well with their current operations. It was purchased by GE in March 2005 for $1.4 billion and […]

Stay ahead of the pack

with the latest independent smart building research and thought leadership.

Have an account? Login

Subscribe Now for just $200 per year per user (just $17 USD per month) for Access to Quality Independent Smart Building Research & Analysis!

What Exactly Do you Get?

  • Access to Website Articles and Notes. Unlimited Access to the Library of over 1,700 Articles Spanning 10 Years.
  • 10% discount on ALL Memoori Research reports for Subscribers! So if you only buy ONE report you will get your subscription fee back!
  • Industry-leading Analysis Every Week, Direct to your Inbox.
  • AND Cancel at any time
Subscribe Now
On 12th November, UTC announced that it had agreed to purchase GE Fire & Security for $1.82 billion which will be the biggest security and safety deal recorded in the last five years. Many column inches have since been written about why this was such a good deal for UTC but in the short term I guess that the GE negotiating team had more to celebrate on the day. In the present economic climate, two years of steeply declining revenues and profits and only one serious buyer for the combined operation, they came out with a good deal.

For UTC this is a deal of 2 halves with the old Edwards Fire Detection business being the jewel in the crown and the security business looking as though it needs a serious technology revamp. The fire business fits in well with their current operations. It was purchased by GE in March 2005 for $1.4 billion and in 2008/9 contributed $500m of the total revenues of $1.2 billion. Without details on profitability it is not possible to put a valuation on this operation but sold as a separate entity it would have raised a lot more competition and may have reached a multiple of 2 times revenue.

When UTC purchased Kidde in 2004 they paid $2 billion on an exit multiple based on revenue of 2. Both companies are essentially product manufactures with high brand awareness - Kidde focused more on the industrial market and Edwards on commercial buildings. This acquisition will make UTC the market leader in fire detection when based on product and installed systems business and they should be able to leverage more business out of the Edwards brand than GE were able to.

This brings us to the second half, GE’s security business which looks to be much flakier. Built on a firm foundation of intruder alarm systems, GE acquired during the first half of this decade such notable companies as Interlogix, VisioWave, CoVi Technologies, Kalatel and GBC and Detection Systems. Together with MASterMind Integrated Software Platform they deliver the full spectrum of physical security equipment and can provide a fully integrated, enterprise solution for monitored security service providers and proprietary central stations.

Well that looks pretty impressive on the face of it, but the general opinion amongst 'experts' is pretty unanimous, that most of the security products are weak and some are well past their sell by date with the exclusion of MASterMind. Where they have good products sadly it would appear that UTC possibly have better ones, which appears to be the case with Lenel access control systems and GE’s Casio Rusco product offerings. The gap in UTC’s portfolio of a leading edge IP Surveillance product has yet to be filled and this is the largest and fastest growing segment of the market.

UTC talk about the opportunity to grow the value add service business on the back of GE’s mainly product business. Whilst this business model has worked well for them in Fire and Safety it will be a much slower process in the Security market which is so fragmented. Installers and Integrators have plenty of choice and they don’t need to buy products from a company that could also be a competitor.

However the deal is good for UTC and also for the industry. This month will see the largest value of transactions since we began monitoring consolidation in the security business two years ago. Momentum is now building up, driven by the fact that there is more confidence in the future and opportunity to buy at realistic prices.

Most Popular Articles

Energisme Energy Performance
Energy

Energisme Energy Performance Software Business & 2022 Financials Examined

This Research Note examines Energisme, the listed French energy performance software firm. This article covers their latest financial results and their 2022 Strategic Plan. Founded in 2004, acquired in 2015 by energy sector specialists and listed on the Euronext Growth market in 2020, Energisme’s Internet of Things (IoT) offering is its N’Gage platform, a Software […]

Simpple IPO & Facilities Management Business
Smart Buildings

Simpple IPO & Facilities Management Business Examined

Founded in 2016, in Singapore, Simpple provides solutions for building managers and owners to operate their buildings autonomously through technology. Originally focused on robotic cleaning, the company soon shifted to an integrated software solution that connects IoT devices, robotic solutions, and the workforce, through a single unified platform, enabled by AI. Achieving revenues of $4.8 […]

SECOM Japan Investment
Security

Why is SECOM Investing in Eagle Eye Networks & Brivo?

The physical security industry has developed a healthy funding environment in recent years with venture capitalists providing significant backing to security companies. But this month’s $192 million investment by Japanese security integrator SECOM, into video surveillance company Eagle Eye Networks and access control provider Brivo is somewhat of an outlier. In this research note, we […]

Subscribe to the Newsletter & get all our Articles & Research Delivered Straight to your Inbox.

Please enter a valid email

Please enter your name

Please enter company name

By signing up you agree to our privacy policy