ALLCASTLE PRINCETON + UTC Fire and Security

UTC Fire & Security Goes for Growth with Acquisition of GE Security.

UTC announced today that they will buy GE Security for $1.8 billion. The full details have not yet been disclosed but this looks to be an exit price based on sales revenue of around unity. This seems like a good buy particularly considering that it cost GE Security at least $2 billion to assemble the main parts of it's business.

Clearly it is not the best time for selling such a major business unit but I guess that this now gives GE the opportunity to buy something else at a bargain price, which makes a better fit with their enshrined ruling; "if you can’t make No 1 or 2 in the business then divest."

So the opportunity to buy a $2 billion business has come at a good time for UTC. A number of the major competitors in the market were keen to bid but the fit was not so good for them at least not at this price.

The purchase of GE gives UTC a significant boost in the US market both for security and fire detection. In particular they will gain market share in fire detection through acquiring the well respected brand name and business of Edwards Systems Technologies which cost GE some $1.4 billion in 2016.

UTC started their Fire & Security business in 2003 and has since spent some $5 billion in buying or investing in fire detection and electronic security companies around the world. The majority of these acquisitions have been in Europe and China. Kidde and Chubb, UK based companies were acquired in 2003/4. These have proven to be shrewd buys. Both were underperforming and have grown significantly since becoming part of UTC.

We expect that UTC will prove to be a better home for GE Security and through this acquisition and others they will continue to increase their market share in this business.

This acquisition is going to have a major impact on the progress of consolidation in the security industry. We cannot see the major players in this industry, none have a market share much above 10%, sitting back much longer on their cash reserves.

Aquisitions, Chubb, Edwards System Technologies, GE Security, Kidde, Mergers, and more:

UTC Fire & Security Goes for Growth with Acquisition of GE Security. + UTC Fire and Security