Our analysis shows that the main restriction is the fact that the major global suppliers have for the most part withdrawn from the acquisition market, because they have lost confidence at this time to commit to the future. It has been left for the medium sized businesses to maintain their strategy for growth through acquisition and now merger and a number of relatively new entrants have bought into the security business. The current situation does give rise for caution but it also presents opportunities to pick up technically smart companies that are badly in need of cash injections to continue product development and capital venture companies are not now so interested in taking a risk in the security market.

Well the acid test is about to take place, for with the sale of GE Fire and Security we will learn the truth. Are the majors in this business prepared to spend their cash and commit to growth and will it amount to the $2 billion that GE paid to assemble the business over the last five years with some first class companies? Or will they leave it to the relatively new aspiring majors to rapidly increase their market share at depressed prices?

The market waits in anticipation for this big one; a deal or deals being taken up on the sale of GE Fire and Security. Last month we identified the companies that we though would be the main contenders to make a bid. We neglected to include the recent entrants from the Defence Industry on the basis that GE would much prefer one bid and none of these companies would want to get involved in fire detection. However because of the lack of confidence and liquidity in the market we believe that the break-up value is much more likely to realise a better deal for GE, so we do expect at least separate bids for Security and Fire Safety. This would then allow the likes of General Dynamics, BAE, Flir and Federal Signal to enter the fray to grow their commercial security business. There are at least 4 companies that would like to acquire the old Edwards fire detection operation now part of GE Fire division. We have in section 1.4 set out the rationale for a swap with Honeywell’s Process Automation business, which in the present economic circumstances may be appealing.

None of the majors in the electronic security business across the three main applications, Video Surveillance, Intruder Alarms and Access Control have got more than a 15% share of the business and there are many hundreds of companies out there that alone make up the products business. So this is a major opportunity to make a very significant leap forward. Can they afford to ignore this opportunity?