Securitas Direct AB, whose alarms guard almost a million properties in nine countries, received a 9.6 billion kronor ($1.5 billion) takeover bid from a group of investors who said the company can grow better in private hands.
Swedish investors EQT Partners AB, Saeki AB, Melker Schoerling AB and Investment AB Latour (LATOB) offered 26 kronor in cash for every Class B share, their ESML Interessenter AB venture said. The bid is 25 percent above the closing price yesterday. The group already holds 40.5 percent of Securitas Direct votes.
Securitas Direct surged as much as 35 percent to 28.1 kronor, indicating investors expect the group to raise its bid. The company, which has struggled to meet targets for customer retention and growth after Securitas AB spun it off last year, needs to invest more to sustain growth in markets including Spain, and can do so better as a private entity, ESML said.
Alan Fournier, managing member of Pennant Capital, which owns approximately 6.5 percent of Securitas Direct shares, described the offer as ``grossly inadequate'' and ``highly opportunistic.''
``The bidders are highly disingenuous in praising the advantages of private ownership during a growth investment phase'' while at the same time adding debt to the capital structure, Fournier said in an e-mailed statement. He said that a ``fair valuation'' of Securitas Direct is ``north of 40 kronor per share.''
``The premium is decent, but by no means exceptional, and there's no guarantee that it will be raised,'' said Johan Stein, who helps manage the equivalent of $14.1 billion at Nordea Asset Management in Stockholm. ``Bids have become less generous as this kind of behavior has become more prevalent.''
The shares closed at 26.5 kronor in Stockholm, where Securitas Direct is based. Before today, the shares had fallen 4.2 percent this year. Securitas spun off the company last year together with another subsidiary to focus on manned guarding.
Securitas Direct hired SEB Enskilda to advise on the offer, and Chairman Ulf Mattsson and another independent board member will evaluate the bid, the company said in a statement.
Securitas Direct needs to expand into new markets to offset cooling housing growth in Spain, its biggest market, and increasing saturation in the Nordic countries, the bidders said.
``The company needs to make big investments, which are going to hurt profit, and this makes it hard to defend its value on the stock exchange,'' Harry Klagsbrun, senior partner at EQT Partners, said today in an interview. The level needed is at least 500 million kronor, he said.
Securitas Direct Chief Executive Officer Dick Seger is standardizing the company's home equipment offerings on wireless security devices that send break-in alerts to local patrol teams and police. The company has introduced the new model with the Aroundio brand in Sweden and Finland.
Securitas AB spun off Securitas Direct at the same time as Securitas Systems AB, which makes video surveillance and alarm technology. Saeki, Melker Schoerling and Latour also hold stakes in Securitas Systems, Securitas, and Assa Abloy AB, the world's largest lockmaker.
The approach unites EQT, the buyout firm associated with Sweden's Wallenberg family, and three listed investment companies. Melker Schoerling was chief executive officer of Securitas between 1987 and 1992 and still chairman. The bid is the first cooperation of the three companies with EQT, which contacted the other bidders to create the group.
EQT owns about 64 percent of ESML, while Latour has 17 percent, Melker Schoerling 10 percent and Saeki 8 percent.
``As a privately held company without quarterly disclosure obligations, it will be easier to implement the capital investments that are required for the company's long-term development,'' Saeki CEO Fredrik Palmstierna said in a release.
Seger cut the target for new customer growth for the year to just above 15 percent in the third-quarter results, down from 20 percent earlier. The company's third-quarter cancellation rate has risen to 6.9 percent from 5.7 percent in the year since the spinoff, while new installations were little changed.
Net income was 54.1 million kronor, while sales gained 15 percent to 953.7 million kronor in the third quarter, the company said last week.