The company announced that it has entered into an agreement to purchase 100% of the shares of Sonitrol Corporation from an ownership group comprised of Carlyle Venture Partners, Wachovia Capital Partners and Spire Capital Partners as well as selected members of Sonitrol management for $275 million cash (approximately 10x EBITDA). Sonitrol, headquartered in Berwyn, PA, provides security monitoring services, access control and fire detection systems to commercial customers in North America via two monitoring centers and a national multi-channel distribution network. Sonitrol, the 8th largest electronic security company in the U.S., brings a strong brand, unparalleled capabilities in audio-verified monitoring and a substantial national account base to Stanley’s Convergent Security Solutions platform. Sonitrol, with revenue totaling approximately $110 million will report into Stanley’s Convergent Security Solutions business which had 2007 revenues approaching $600 million. The Boards of Directors of Stanley and Sonitrol have approved the transaction, which is subject to regulatory approvals and other customary conditions. The acquisition is expected to close during the third quarter of 2008.
The estimated effect of the transaction on the company’s revenues is summarized below:
Item Annual Revenue EPS
Purchase of Sonitrol ↑$ 110 million (1) ’08: ↓ $ 0.02, ’09: ↑ $ 0.04 then ↑ by approximately $0.05 each year thereafter
(1) 2008 impact of approximately $55 million.
Greg Waybright – Interim VP, Investor Relations
Sonitrol, a market leading independent U.S. commercial security company, had 2007 revenues of approximately $110 million. Sonitrol is well positioned for growth given its integrated suite of security solutions, its established brand and respected reputation and its national multi-channel distribution network. Sonitrol, an industry leader in apprehension rates, maintains one of the lowest false dispatch rates in the market, and is a leader in verified audio monitoring services.
Recurring monthly revenues (“RMR”) from commercial monitoring activities represents an important element of Sonitrol’s annual revenues; additional revenues are generated from security system and equipment installation, repair services, proprietary equipment sales and royalty fees generated from Sonitrol’s franchisees. A one-time installation fee (including the cost of equipment) is billed at the commencement of customer security contracts. Additionally, monthly monitoring fees are charged over the life of contracts, for which a typical initial length is five years, and service fees are generated from repairs that are not covered by warranty. Additional information on Sonitrol can be found at www.sonitrol.com.