Tyco's USD1.6 billion South Korea unit attracts bids from KKR, Bain - sources

December 9
5:01 AM 2013

According to people familiar with the matter, Tyco International Inc's South Korean security systems unit had spurred interest in private equity firms that it is now counting KKR & Co LP and Bain Capital among its potential buyers. Bloomberg noted that billion-dollar buyouts are not often seen in the Asian region, but security companies tend to attract potential buyers in provate equity firms as these assets are considered stable revenue generators.

Should the sale of ADT Caps proceed, it will follow Blackstone Group's over USD2 billion acquisition of US firm Vivint Inc last year and Bain's purchase of European security firm Securitas Direct in 2011 for USD3.4 billion.

The sources added that other bidders for ADT Caps include Hong Kong-based Affinity Equity Partners and South Korean firm MBK Partners and CVC Capital Partners. The sources declined to be named as the sale process was confidential. Morgan Stanley was reported tapped for the role as an advisor for Tyco regarding its divestment of ADT Caps.

When asked by Reuters about their bids for the South Korean unit of Tyco, Morgan Stanley, KKR, Bain, CVC and MBK refused to provide a statement commenting on the potential acquisition. On the other hand, Tyco and Affinity had not responded to the news agency's emails requesting for comment.

The diversified conglomerate Tyco International had split up last year, prompting the reduction of the commercial fire and security systems to a smaller firm. ADT, its North American home security arm was spun off as a separate entity and Tyco's flow control unit consolidated with Pentair Ltd.

The sources disclosed that the sale of ADT Caps could fetch around USD1.6 billion, which is based on its ten times multiple of earnings before interest, depreciation and amortization or EBITDA of USD160 million as of September 2013. The sources noted that this was significantly bigger than the eight times EBITDA multiple for Securitas Direct and Vivint.

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