Protection One Inc. has entered into a definitive agreement to be acquired by affiliates of GTCR, a Chicago-based private equity firm, for about $392 million. Tim Whall, former COO of HSM Protection Services, will become Protection One’s CEO.
A GTCR affiliate will make the formal offer on May 3 to acquire all of the outstanding common stock of Protection One for $15.50 a share. Upon completion of the deal, Protection One will become a private company, wholly owned by an affiliate of GTCR.
The deal value is based on the company’s 25.3 million shares outstanding as of March 5, according to Reuters.
The offer price represents a premium of 13 percent over the April 23 closing stock price of $13.76, and a premium of 118 percent over the $7.10 closing stock price on Jan. 19, which was the last business day prior to Protection One’s public announcement that it was considering a possible sale of the company. The total purchase price, including the refinancing of Protection One’s debt, will be approximately $828 million.
GTCR’s planned purchase of Protection One marks its third collaboration with Whall, who previously partnered with GTCR on investments in Cambridge Protection Industries and Honeywell Security Monitoring, which operated as HSM Protection Services.
“I am thrilled to be partnering with GTCR for the third time,” Whall said in a prepared statement. “The national footprint of Protection One positions the company well to accelerate growth in the attractive area of commercial sales. We will continue to cultivate Protection One’s strong base in residential sales while leveraging the company’s strengths within its developing commercial business through the use of new technology applications and an expansion of its sales force.”
Cambridge, operating through its SecurityLink brand, provided electronic security services to more than a million customers. Cambridge was sold to ADT for about $1 billion in cash in 2001. HSM, a leading provider of security services to the commercial market, was sold for $545 million in cash to Stanley in 2007.
“We are delighted to work with Tim again to build on our history of successfully growing and transforming businesses together,” said David Donnini, a GTCR principal. “Our successful track record working with Tim has been instrumental in our acquisition of Protection One. The search for finding the right company with Tim has been two years in the making.”
The future plans for current Protection One CEO Richard Ginsburg have not been announced other than “his focus is on completing this transaction,” a company spokesperson tells SSI.
In a press statement, Ginsburg said the company’s board of directors determined the proposed price for the transaction “will deliver value to Protection One’s stockholders in a more efficient and more immediate fashion than under a traditional merger process.”
Affiliates of Quadrangle Group LLC and Monarch Capital Partners, which own more than 60 percent of the diluted shares and about 70 percent of the currently outstanding shares of Protection One, have each executed a tender and support agreement.
J.P. Morgan Securities Inc. and its legal advisor is Kirkland & Ellis LLP served as financial advisor for Protection One. Lazard Freres & Co. LLC also provided advice to Protection One’s board of directors and its independent transactions committee.
Morgan Keegan & Co, Inc. and Barclays Capital served as M&A advisors and Barnes Associates served as an industry advisor to GTCR. Latham & Watkins LLP and Skadden, Arps, Slate, Meagher & Flom LLP provided GTCR legal counsel.
For more insight behind the companies and players involved in the deal, see SSI Editor-In-Chief Scott Goldfine’s blog post here.