Honeywell Security Business for Sale
MORRIS TOWNSHIP, N.J.
Honeywell Int’l Inc. says it is preparing to sell its Minneapolis-based home security alarm monitoring business, making it the third of the top five U.S. alarm companies to look for a buyer, sources said. The company announced its intentions to employees earlier this year, spokeswoman Shawna Todd told The Business Journal in late March. Word of the impending sale leaked out through a report in a New York-based publication. Honeywell expects to find a buyer and close a deal by the end of 2003, Todd said.
The alarm business employs about 850 people nationwide. Honeywell Security has annual revenues of about $220 million and ranks No. 4 in market share among U.S. home monitoring alarm companies. The company will likely attract between $250 million and $500 million for the business, sources said. Honeywell employs about 5,300 in Minnesota. The company’s Automation and Control Solutions has about 2,400 employees in the Twin Cities.
According to a source, Honeywell in 2000 paid $2.2 billion for the Pittway security operations business and has found owning it and Honeywell Security a conflict. Alarm installers buying Pittway products often end up bidding against Honeywell Security for alarm monitoring contracts, the source explained. However, a Honeywell spokeswoman has denied that assertion. “The decision is based on the strategy of focusing on higher-growth security products,” she said.
Besides Honeywell Security, Topeka, Kan.-based Protection One Inc. has announced it is for sale. It is early in the auction process, a spokesman said. In addition, the management of Dallas-based Monitronics Int’l Inc., the fifth-largest alarm business, is also talking to suitors and is well into its unannounced sales process, sources said. Directors at Abry Partners, the private equity firm that controls Monitronics, did not return calls.
The entire home security market seems to be in flux, providing private equity firms with an opportunity to enter and become a major player. “For the right buyer, you could immediately become a dominant player,” Jack Mallon, managing director of New York-based Mallon Capital LLC, which follows the security industry, told the publication.
Honeywell has not yet retained a banker in its sale. Protection One has hired Bear, Stearns & Co. with its majority owner Westar Energy using Lehman Brothers Inc.; and the controlling owner of Monitronics, Boston-based Abry, is selling the business itself, sources said. It has owned Monitronics since 1996 and buyout firms like to acquire and sell businesses within five years.
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