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Tyco Closes Exacq Acquisition

Zacks Equity Research

Security and protection services provider Tyco International Ltd. (TYC) recently completed the acquisition of Exacq Technologies, an open architecture video management systems (:VMS) developer for security and surveillance applications. The purchase deal was settled at $150 million in cash.

The acquisition is in line with Tyco’s growth strategy and strengthens its position in the video security market. Exacq is a leading player in the VMS sector with a diverse product portfolio that ranges from a single camera application to large integrated systems incorporating thousands of camera applications. Most of these complement the existing product range of Tyco Security Products business unit.

Tyco expects annualized revenues of $75 million in fiscal 2014 from Exacq. The acquired business will be integrated into the Tyco Security Products business unit, which offers access control, video, location-based tracking and intrusion solutions.  

We remain bullish on Tyco’s fortunes based on the relative stability of the global security markets as well as high and predictable cash generation, limited balance sheet risk and easy cost-out opportunities. The company’s solid balance sheet and healthy liquidity position are also potential catalysts to continuously fund organic and inorganic growth initiatives and maximize return for its shareholders.  

Tyco provides latest fire protection and security products and services to more than three million customers across the globe. The company has more than 70,000 employees in over 1,000 locations across 50 countries, serving various end markets, including commercial, institutional, governmental, retail, industrial and energy, residential and small business.

Tyco currently has a Zacks Rank #3 (Hold). Other stocks in the similar industry that look promising and are worth considering now include United Technologies Corp. (UTX), Hutchison Whampoa Ltd. (HUWHY) and Macquarie Infrastructure Company LLC (MIC), each carrying a Zacks Rank #2 (Buy).

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