United Technologies Buying Lenel Systems for $400 Million

HARTFORD, Conn.

March 20, 2005 SSI Staff

United Technologies Corp. (UTC) says it plans to acquire
security system software developer Lenel Systems Int’l Inc.
in a purchase worth $400 million. The purchase, which is
subject to regulatory approval, is expected to close in the
coming months.

Under the deal, Lenel will remain an independent entity and
report to Olivier Robert – president of UTC’s fire and
security company Chubb.

“We believe that as part of this organization, Lenel will
continue to deliver even greater value to our employees,
customers and partners,” said Lenel President Elena
Prokupets in a statement. Elena and Rudy Prokupets founded
Lenel, which employs 150 in 75 countries, in 1991.

Lenel’s main product is its OnGuard™ suite of security
software designed to manage various aspects of a security
system including access control, monitoring, digital video,
biometrics, and intrusion detection as well as employee and
visitor management capabilities.

Industry financial expert Jack Mallon – managing director
of Mallon Associates, a division of C.E. Unterberg, Towbin –
calls the $400 million purchase a “very rich price,”
adding it amounts to more than five times Lenel’s yearly
sales.

“It shows you what a software company can command and bodes
well for future acquisitions,” says Mallon, author of
Mallon’s Security Report and SSI‘s annual HREF=t_ci_articleView.cfm?aid=1886&sid=0>security stocks
report.

The Lenel acquisition will be the latest in a recent string
of moves for the parent company of Chubb.

UTC announced in
December that it was taking over fire systems equipment
developer Kidde plc.

On Feb. 2, UTC’s Chubb acquired systems integrator ACP
Engineering Inc., which handled the security systems
installation at Foxwoods Casino that was profiled in the HREF=t_ci_articleView.cfm?aid=1714&sid=0>September 2004
issue of SSI. Chubb and UTC are also the parent
companies for alarm monitoring firm Counterforce USA.

Mallon says the acquisitions show UTC is making a
commitment to the electronic security industry. “They will
be formidable competition for the big players, namely
General Electric and Honeywell,” Mallon says. “They show
signs of wanting to be an 800-pound gorilla in this space
and they have the resources to do so.”

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