Ameritech Corp., expanding its reach into the $13 billion electronic security business, said it has agreed to acquire the security-monitoring assets of Republic Industries Inc. for $610 million in cash.
The Chicago-based communications company said it will mesh the assets of Republic Security Company Holdings into its security-monitoring unit, SecurityLink. With the addition of Republic’s 310,000 customers, Ameritech said it will increase its subscriber base by 55 percent, to 876,000 customers.
The purchase will also have a positive effect on Ameritech’s earnings in 1998, the first year of combined operations, said Mary Tudela, SecurityLink president. Republic Security had revenue of about $54.6 million in the first six months of the year.
Meanwhile, Ameritech has reportedly reached a separate agreement to acquire the security unit of Rollins Inc., an Atlanta-based provider of pest-control and lawn-care services, for more than $200 million. Rollins Protective Services has about 130,000 customers.
Ameritech and Rollins declined to comment.
“Our plan is to be the leader in this business and today’s action is a step toward that goal,” Richard C. Notebaert, Ameritech’s chairman and chief executive, said in a statement. “In keeping with our strategy to introduce new services for customers, we see this as a tremendous growth opportunity.”
The Republic acquisition bolsters Ameritech’s position as the No. 2 provider of burglar alarms, closed-circuit televisions and related services behind ADT Ltd., which Republic unsuccessfully tried to acquire last year. ADT, now a unit of Tyco International Ltd., still will have nearly twice as many customers as SecurityLink after the Republic acquisition.
Ameritech sees security as a natural extension of its telephone services, because both involve wiring up people’s homes and businesses. The company entered the security business in 1994, when it acquired SecurityLink. It has aggressively grown the business, acquiring National Guardian Corp. in 1995 and the security-monitoring assets of Circuit City Stores Inc. last year.
For its part, Republic essentially has ended its two-year foray into the security business. Although the company made 25 acquisitions within that period to grow to the nation’s seventh-largest security-monitoring company, its only remaining security business involves car alarms and vehicle-tracking devices.
Failing to acquire ADT “severely inhibited our intention of having a leadership role in electronic security,” said Bob Guerin, president of the Republic unit. The native Chicagoan said that although most of the management team plans to join Ameritech, he’s going to stay behind in Ft. Lauderdale, Fla., where Republic is based.
Republic said it wants to focus on businesses where it has industry leadership. The company owns AutoNation USA, a rapidly growing chain of used-car dealerships, and several auto rental companies, including National Car Rental System Inc. and Alamo Rent A Car Inc.
“Although this business is growing at 25 percent and we have been extremely pleased with the performance of our security division, we recognize that it would take considerable management time and corporate resources for Republic to achieve the leading position in electronic security,” H. Wayne Huizenga, Republic chairman and co-chief executive, said in a statement.
Ameritech said it will add 3,000 Republic employees, most of whom are located in the Southeast, Mid-Atlantic and Rocky Mountain states, which would boost its work force to 7,200 people. The company said it’s too early to say whether any Republic employees will be dismissed. “But whenever we do these kinds of transactions, we don’t remove very many people,” Tudela said.
The deal, which is subject to government antitrust approval, is expected to close late this week or early next week.
In New York Stock Exchange composite trading Monday, Ameritech shares rose 69 cents, to close at $66.12, while Republic shares rose $1.87, to $32.31.
