Tyco Int'l To Sell South Korean Home Security Unit To Carlyle Group For $1.9 Bln

By RTT News, March 03, 2014, 07:23:00 AM EDT

(RTTNews.com) - Swiss security products maker Tyco International Ltd. ( TYC ) agreed Monday to sell its South Korean home security unit or ADT Korea, to private equity giant Carlyle Group LP ( CG ), in an all-cash deal valued at about $1.93 billion.

The deal, which is expected to close in the second quarter, is subject to customary closing conditions including required regulatory approval.

"We are pleased to announce the sale of ADT Korea in a transaction that provides value to our shareholders. While ADT Korea is healthy and profitable, this transaction represented a unique opportunity to realize the value generated in the business over time and redeploy it to further enhance our portfolio and maximize shareholder value," Tyco CEO George Oliver said.

The deal is billed as the largest private equity buyout deal in US dollar value in Korea since 2008. The deal also establishes Carlyle's long-term commitment to Korea since the establishment of Carlyle Korea in 1999. Carlyle has already invested more than $920 million of equity in 17 deals in Korea as of December 31, 2013.

The deal includes the sale of Tyco Fire & Security Services Korea Co. Ltd. and its subsidiaries ADT Caps Co., Ltd., Capstec Co., Ltd. and ADT Security Co., Ltd.

The South Korean home security unit, known as ADT Caps was established in 1971. The unit provides central monitoring services, access control, video surveillance, and other integrated security solutions. ADT Korea is expected to generate revenues of about $600 million and annual earnings contribution to Tyco of about $0.20 per share in fiscal 2014.

For the deal, Carlyle has secured committed debt financing from Korea Exchange Bank, Kookmin Bank, Industrial Bank of Korea, Korea Investment & Securities and UBS AG. Equity for the deal will come from Carlyle Asia Partners IV and Carlyle Partners VI.

Sanghyun Lee, Managing Director on the Carlyle Asia Buyout team, said, "ADT Korea is a highly stable and profitable business with attractive market positioning, strong brand power and excellent cash flow profile. We believe the Korean security services industry is under-penetrated, and growing awareness and needs for safety will anchor significant growth in the future."

South Korea is seen as a safe haven for investment by private equity giants as the investors can take full control of the assets, unlike in some other Asian markets where the bids could run into political opposition.

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Tyco Int'l To Sell South Korean Home Security Unit To Carlyle Group For $1.9 Bln