(Bloomberg) -- Securitas AB of Sweden is buying the Electronic Security Solutions business from Stanley Black & Decker Inc. for $3.2 billion in cash.
The acquired business, known as Stanley Security, is expected to generate revenue of nearly $1.7 billion this year and will give the Swedish company a bigger global footprint as it aims to double sales from higher margin security solutions and electronic security by 2023, according to a statement on Wednesday.
The acquisition means “the profile of Securitas changes from a leading guarding company with electronic security and solutions capabilities, to a leading intelligent security solutions partner,” Chief Executive Officer Magnus Ahlqvist said.
The deal, the largest in Securitas’ history, will be fully funded through an underwritten bridge facility by Swedish lender SEB AB, which is expected to be refinanced by long-term debt financing and an equity rights issue of $915 million.
“Pro-forma this will increase the leverage of Securitas to around 3.7-3.9x from the current 2.2x, which is likely to lower the current BBB rating from S&P to BBB-,” Brian Godsk Borsting, an analyst at Danske Bank, said in a client note.
In early trading on Wednesday, Securitas shares fell as much as 1.2% while the credit spreads on its euro-denominated bonds due 2028 widened slightly to 62.5 basis points, signaling increased risk aversion from debt investors.
Securitas said the purchase price represents a multiple of about 13 times Stanley Security’s estimated adjusted earnings before interest, tax, depreciation and amortization in 2021 including cost synergies of about $50 million.
Morgan Stanley & Co. International Plc acted as an adviser to Securitas on the transaction, the company said. The transaction is subject to regulatory approvals and is seen completed during the first half of 2022.
(Adds analyst comments from Danske Bank, market prices)
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