In a separate transaction, the company also 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.
John F. Lundgren, chairman and chief executive officer, commented: "These two transactions are important steps toward advancing our growth strategy and repositioning the company to be less dependent on construction and DIY markets. We continue to be strongly committed to shifting the company's portfolio into higher-growth, higher-return areas such as electronic security. The addition of Sonitrol, with its iconic brand and strong franchisee and direct sales network, expands the scale of our existing North American monitoring operation, increases our recurring revenue and adds breadth and depth to our electronic security product offering."
Exit of Several Small, Non-Strategic Product Lines
In addition to the two transactions announced on June 12, the company is developing plans to exit several small, non-strategic product lines during the remainder of the year with associated revenues of approximately $60 million. Assuming that these exits are accomplished through discontinuation or sale at various times throughout the year, their results will be reclassified to discontinued operations for the current and all prior periods in accordance with generally accepted accounting principles as events transpire. Details of these exits will be communicated as necessary after plans are finalized and/or transactions occur.
