NEW BRITAIN, Conn.--The Stanley Works continued on its acquisition path last week announcing an agreement to purchase Sonitrol Corp., which will join the growing Stanley Convergint Security Solutions group, for $275 million.
The purchase of 100 percent of the shares of the company from an ownership group comprised of Carlyle Venture Partners, Wachovia Capital Partners and Spire Capital Partners as well as selected members of Sonitrol management was marked at approximately 10x EBITDA. Sonitrol, headquartered in Berwyn, Pa., provides security monitoring services, access control and fire detection systems to commercial customers in North America and was the 8th largest electronic security company in the United States.
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Tony Byerly, chief operating officer of Stanley CSS, said Sonitrol has a great reputation in the market and quality customer service and "you can see the a lot of similarities between organizations."
"By combining Stanley CSS with Sonitrol, we have become the third largest provider now in the United States overnight," Byerly said. "One of the nice vertical markets Sonitrol plays in very well is the K-12 education market.
Brett Bontrager, president of Stanley CSS, said Sonitrol was a good candidate because of its "large commercial installed base direct to the end user, which we find very attractive. It has the ability to drive recurring revenue not just in monitoring but in other services."
"Stanley has been going through a portfolio shift for the last five years, growing the security side of our business," he said. "If you go back to 2002, we have doubled the company from that period of time and have grown the security business from about $300 million dollars to a $1.4 billion. We continue to stay focused on growing the security business and Sonitrol met strategic filters of the continued growth of the portfolio."
Sonitrol currently has 18 locations and 118 franchises. Byerly said the initial intention is to sit down with franchises and starts discussions on how this can be a win-win for both parties. This, he said, will open up new opportunities for Stanley while at the same time enhance the capabilities of the franchise network.
"As the newcomer in that environment, there is a lot of opportunities for us to get those relationships moving forward in a positive way for both sides," Bontrager said.
Sonitrol, with revenue totaling approximately $110 million will report into Stanley CSS, which had 2007 revenues approaching $600 million. The boards of directors of both organizations have approved the transaction, which is subject to regulatory approvals and other customary conditions. The acquisition is expected to close during the third quarter of 2008.
Bontrager said Stanley has stayed true to its strategic brands in the past and and Sonitrol will be added to that list.
"We continue to be incredibly pleased with the HSM acquisition -- the platform brought recurring services, a world class monitoring, call center and world class monitoring team with it," he said. "We want to add many assets to that platform here in North American and globally."
