Will more takeovers spice up the stodgy home-security industry? Investment adviser Charles LaLoggia thinks so. He first tagged ADT, the nation's largest home-protection company, as a potential target in March, 1996, when it was trading at 15 a share. LaLoggia says a "takeover wave" will hit the industry because of Tyco International's white-knight bid of 28 a share for ADT. That has foiled a hostile 22-a-share takeover bid by Western Resources. What's LaLoggia's take on the next takeover target in the home-alarm business? He thinks one potential target is Protection One (ALRM), which sells and monitors alarm systems for homes and small businesses. LaLoggia, editor of market letter Special Situation Report, notes that Protection One, currently trading at 9 a share, recently signed an agreement with Pacificorp, a large electric utility, giving Protection One the right to market its alarm services to Pacificorp's 1 million customers.
Is Pacificorp thinking along the same lines as Western Resources? LaLoggia thinks many utilities are on the lookout for new services they can deliver to their customers in this era of deregulation. "The security monitoring business looks like a natural," he says . Protection One "would be a perfect target for any of those companies," says LaLoggia, who figures that the company is worth 14 to 16 in a buyout.
He notes that other companies that run wire into houses--such as cable TV and phone outfits--may already be thinking along the same lines. He notes that Wayne Huizenga, who heads Republic Industries, also tried to acquire ADT in an effort to get into the $13 billion security-alarm industry, which has been growing at 20% a year.