Allegion plc’s ALLE, subsidiary Allegion Luxembourg Holding & Financing S.à r.l, has inked an agreement to acquire SimonsVoss Technologies GmbH from HgCapital for €210 million ($233 million, as of Jun 29). The transaction, subject to certain regulatory approvals, is anticipated to close in the third quarter of 2015.
Allegion plans to fund the acquisition through a combination of existing cash on hand and its revolving credit facility. The deal is likely to be accretive to the company’s EBITDA margin and earnings by 2016. Excluding transaction and integration costs, the deal is expected to be instantly accretive to earnings.
Headquartered in Munich, Germany, SimonsVoss is an electronic lock company with a suite of solutions for electronic access control sold globally. The company commands a leading position in the rapidly increasing European electronic lock market.
SimonsVoss generated sales of approximately €52 million in 2014. Post acquisition, SimonsVoss will operate within the EMEIA segment of Allegion, which includes Europe, the Middle East, India and Africa. Allegion will gain from the German electronic lock maker’s technical expertise in the safety and security business.
Acquisitions are an important part of Allegion’s growth strategy. The security products industry is highly fragmented, particularly in the developing markets, and involves the use of emerging technology products that employ newer technologies. This creates numerous opportunities to broaden the product portfolio as well as geographic footprint and enhance the strategic market segment position through buyouts.
In May, Allegion acquired Brio and added sliding and holding door hardware products to its portfolio, thereby expanding it globally. In Apr 2015, the company completed the buyout of Zero International Inc. With this, the company will be able to emphasis more on green building applications that support heating and cooling efficiency, as well as delivering solutions for sound dampening and fire and smoke sealing.
Allegion currently carries a Zacks Rank #2 (Buy). Some well-ranked stocks in the same sector are Lakeland Industries Inc. LAKE, Pointer Telocation Ltd. PNTR and Net 1 Ueps Technologies Inc. UEPS. While Lakeland Industries and Pointer Telocation sport a Zacks Rank #1 (Strong Buy), Net 1 Ueps Technologies has the same Zacks Rank as Allegion.
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