Safety, specialty and industrial services provider APi Group Corp. (APG:NYSE) today announced that "it has entered into a definitive agreement to acquire the Chubb Fire & Security Business (Chubb) from Carrier Global Corp. (CARR:NYSE) for an enterprise value of $3.1 billion, which is composed of $2.9 billion cash and approximately $200 million of assumed liabilities and other adjustments."
The company advised that Chubb's operations are based in the U.K. and that it employs around 13,000 people worldwide. The firm's sales and service network serve greater than 1.5 million customers throughout 17 countries in Asia, Canada and Europe. APi Group stated that Chubb fire safety and security business offers customers integrated reliable turnkey service starting from design and installation through monitoring services and ongoing system maintenance. The firm stated that for the 12-month period ended March 31, 2021, Chubb generated adjusted EBITDA of about $213 million from $2.2 billion in total revenue.
The company said that it believes the acquisition offers compelling synergy opportunities and will be highly accretive as it transforms APi into the world's leading life safety services provider and increases recurring services revenue in tune with its services-focused business model.
APi's President and CEO Russ Becker commented, "This is a very exciting day in the history of APi…With the acquisition of Chubb, we see a tremendous amount of accelerated organic growth and margin expansion opportunities across our combined platform. There is also significant opportunity to leverage Chubb's 200+ year history of providing statutorily required and route-based services through its internationally recognized brand."
Sir Martin E. Franklin, Co-Chair at APi, noted, "We believe the transaction will be highly accretive…Together, the business can move faster and more efficiently, globally leveraging the expertise and ability of our combined 26,000 dedicated and talented employees."
APi Co-Chair James E. Lillie stated, "Importantly, 50%+ of our revenue will be service based with meaningful, statutorily-required, recurring revenue. We believe there is significant future value creation potential both through organic growth opportunities, as well as through continued incremental transformational and bolt-on M&A."
"We are delighted to welcome a combined $800 million investment in perpetual preferred equity from Blackstone and Viking Global Investors," Lillie added.
The company stated that it will fund the purchase from a combination of cash on hand, preferred equity financing and debt. APi expects that the transaction, which remains subject to a completion of a consultation process and regulatory approval, will most likely close near the end of 2021
In a separate news release today, Carrier Global stated that "the sale enables Carrier to focus on its core businesses and to re-allocate net proceeds consistent with its stated capital allocation priorities, including funding organic and inorganic growth, dividends, and share repurchases within a solid investment grade credit rating." Carrier pointed out specifically that its global fire and security products business is not being sold as part of this transaction and remains an important part of its portfolio and long-term strategy.
Carrier's Chairman and CEO Dave Gitlin remarked, "Carrier continually assesses all aspects of our global portfolio to ensure alignment with our strategic business priorities and optimal value for our stakeholders…This transaction drives greater focus for Carrier and allows us to re-allocate proceeds from the divestiture toward our higher strategic imperatives."
APi is headquartered in New Brighton, Minn., and provides contracted and statutorily mandated safety, specialty and industrial services to businesses in more than 200 global locations.
Carrier is based in Palm Beach Gardens, Fla. and claims to be "the leading global provider of healthy, safe, sustainable and intelligent building and cold chain solutions."
APi Group started the day with a market cap of around $4.1 billion with approximately 201.3 million shares outstanding and a short interest of about 2.2%. APG shares opened about 4% higher today at $21.13 (+$0.79, +3.88%) over yesterday's $2034 closing price and reached a new 52-week high price this morning of $23.61. The stock has traded today between $20.72 and 23.61 per share and is currently trading at $22.63 (+$2.29, +11.26%).
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