Johannesburg - New York Stock Exchange-listed global fire protection and security company Tyco has decided to disinvest from South Africa and agreed to sell its core security business in the country, which operates under the ADT brand, to Fidelity Security Group for about R1.9 billion ($140m).
Tyco global communications vice-president Stephen Wasdick yesterday confirmed to Business Report that the decision to sell its South African security business was the result of a regular review of the group’ businesses globally, which examined several business fundamentals.
Wasdick stressed it was “an entirely commercial decision” and plans by the South African government to restrict foreign ownership of the security industry did not play a role in the decision.
The Private Security Industry Regulation Amendment Bill, which is awaiting President Jacob Zuma’s signature, will force the world’s biggest security services providers to relinquish control of their South African operations and require all security firms and manufacturers, importers and distributors of security equipment to be at least 51 percent owned by South Africans.
Wasdick added that Tyco would continue to participate in the South African fire and security industry as a provider of fire protection, security and life safety products, as well as specialised performance solutions for retail businesses.
Best option
“We examined a number of business structures but determined that divesting the core business while still providing safety and security products and services and participating in the market through several of our other businesses was the best option for our company,” he said.
Wahl Bartmann, the chief executive of Fidelity, said the negotiations with Tyco took about a year to finalise after the group was selected as the preferred bidder following a tender process.
Bartmann said the addition of ADT to Fidelity’s portfolio would significantly boost its armed response and security technology offering.
It also affirmed Fidelity’s current position as the leading black empowered integrated security solutions provider in Southern Africa, he said.
The group is a 100 percent South African, 54.62 percent black-owned company.
“The acquisition, once completed and after all relevant approvals are obtained, will allow Fidelity Security Group to enhance its position as the leading provider of both residential and commercial integrated security solutions in Southern Africa,” he said.
The acquisition is still subject to regulatory approvals.
ADT will retain its name after the acquisition and operate as Fidelity ADT, a subsidiary of Fidelity. Bartmann said that from an employee numbers perspective, the acquisition would make Fidelity the biggest player in the domestic security market.
Consolidation
“We have about 47 000 employees now and after the transaction will have 57 000. We have a footprint of 140 branches and they (ADT) have got 26. There will be some consolidation of some branches,” he said.
Bartmann stressed they did not anticipate any retrenchments, because Fidelity worked more in the commercial market and ADT were big in the domestic market. “We will leave the footprint and expand into it with other services,” he said.
Bartmann said Fidelity had agreements with the major banks to fund the transaction, but would fund some of it from the group’s own resources.
Stuart Clarkson, the chief executive of ADT, said they were excited about the opportunities the sale to Fidelity presented for ADT’s future, their customers and employees. It would provide ADT with the capacity to provide their customers with a more integrated, proactive and robust security and proactive guarding service.
“Where many guarding companies only respond to crime incidents, Fidelity works to proactively mitigate crime in the communities in which it operates,” he said.
BUSINESS REPORT