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Securitas AB

Securitas AB

Lindhagensplan 70
SE-102 28 Stockholm
Sweden
Telephone: (+ 46) 8-657-74-00
Fax: (+ 46) 8-657-70-72

Web site: http://www.securitasgroup.com

Public Company
Incorporated:
1934
Employees: 202,794
Sales: SKr 40.86 billion ($4.33 billion) (2000)
Stock Exchanges: Stockholm
Ticker Symbol: SECU-B
NAIC: 561612 Security Guards and Patrol Services; 561621 Security Systems Services (Except Locksmiths)

Swedens Securitas AB is locking up the worlds security services market. Based in Stockholm, Securitas is the worlds leading provider of security services, with a 7 percent market share in the highly fragmented industry. Through its acquisitions of Pinkertons and Burns International, in 1999 and 2000, respectively, Securitas has also become the leading security services firm in the United States, with more than 17 percent of the total market. In 2001, Securitas restructured its operations into five business areas: Security Systems, providing security and alarm systems to corporations and other large-scale customers; Direct, providing alarm systems for small businesses and individual customers; Cash Handling Services, concentrated primarily in Europe and providing 10 percent of the companys sales; Consulting & Investigations, which also provides private security services; and Security Services, the companys single largest market, accounting for nearly 80 percent of sales in 2000. Security Services is further divided in United States (41 percent of total sales) and Europe (39 percent of total sales) components. These sales topped SKr 40 billion in 2000making the company some 50 times larger than it was just a dozen years earlier. The company trades on the Stockholm stock exchange; Thomas Berglund serves as Securitass president and CEO.

Securing Scandinavia in the 1930s

Securitas traces its roots back to the turn of the 20th century, when Kjobenhavn Frederiksberg Nattevagt was founded by Philip Sorensen and Marius Hogrefe. The new company offered guard services in Sorensens and Hogrefes native Denmark. Sorensen soon became the primary force behind the companys growth. In 1918, Kjobenhavn Frederiksberg Nattevagt merged into De Forenede Vagtselskaber, the predecessor to the future ISS Group.

Sorensens son Erik Philip-Sorensen joined his father in developing the family business as it began to expand beyond Denmark. In 1934, Erik Philip-Sorensen brought the company into Sweden, buying Hälsingbords Nattvakt, based in Helsingborg. Philip-Sorensen began acquiring other Swedish security companies, building a leading position in that countrys security market. While Securitas remained under ISS Groups control, the Philip-Sorensen family was responsible for their companys growth in Sweden and beyond.

After establishing its Swedish position, Securitas began expanding further afield in the 1950s. For this expansion, Philip-Sorensen was aided by his sons Jorgen and Sven. During the 1950s and 1960s, Securitass expansion helped place it among the leading European security services companies. The companys first international move came with the launch of a subsidiary in the United Kingdom in 1950; at that time, the company combined all of its operations under a single name, Securitas International. Jorgen Philip-Sorensen played an active role in the companys expansion outside of Scandinavia, which targeted especially the United Kingdom and Belgium during this period, while Sven concentrated especially on its Swedish operations, leading a series of acquisitions, including that of Svensk Nattvakt.

In 1963, Securitas formed two new subsidiaries in the United Kingdom, Store Detectives Ltd. and Securitas Alarms Ltd. While Erik Philip-Sorensen remained at the head of the company, son Jorgen was appointed to lead the companys growing U.K. operations in 1965. Three years later, the company restructured its four U.K. businesses under a new subsidiary and brand name, Group 4 (Total Security) .

Jorgen and Sven Philip-Sorensen took over the companys leadership only upon Erik Philip-Sorensens retirement in 1974. In that year, the Philip-Sorensen family bought control of Securitas from the ISS Group. The brothers maintained joint-ownership of the company until 1981, when Securitas was divided equally between them. Sven Philip-Sorensen took over the companys Swedish operations, keeping the Securitas name. Jorgen Philip-Sorensen remained at the head of the companys international activities, now renamed Group 4 Securitas. Group 4 Securitas was later acquired by Falck, of Denmark, creating the worlds second largest security services group, Group 4 Falck A/S.

Expansion Drive in the 1980s

Sven Philip-Sorensen did not remain for long at the helm of Securitas. By 1983, he had sold his interest in the company. While parts of Securitas were bought up by Group 4, the largest part was taken over by Swedish investment firm Investment AB Latour in 1985. Latour, led by Gustaf Douglas, who also became vice-chairman of Securitas, led the company on a dramatic expansion drive beginning in 1988.

In the meantime, Securitass new management, led by Melker Schörling since 1987, had trimmed Securitass operations, focusing the company entirely on guard and security services. Over its previous decades, Securitas had acquired a number of diversified holdings; these were now sold off, leaving only a core security operation. The newly slimmed down company had sales of less than SKr 1 billion as its acquisition drive began in 1988.

In that year, the company acquired Assa, a Swedish maker of locks. By the following year, Securitas displayed an interest in the international market, acquiring security companies in Norway and Denmark, and then beyond Scandinavia to enter Portugal as well. Not all of the companys expansion came from acquisition: in 1989, the company also launched its own operations in Hungary.

By 1991, the companys sales had topped SKr 3 billion. Yet Securitass growth had only just begun; fueling the companys further ambitions, Securitas took a listing on the Stockholm stock exchange in that year. Soon after, the company made its first entry into the United States, buying up Arrow and thereby expanding its lock making operations.

The following year, Securitas grew again, now with the purchase of Spains Esabe, and then Protectas, which gave it operations in France, Austria, Switzerland, and Germany. The company moved into Finland in 1993, acquiring security operations in that country. At the same time, Securitas began focusing more and more on security servicesa fast-growing industry in the early 1990sand merged its Swedish lock-making operations into a joint venture with Finlands Metra, creating Assa-Abloy. The company sold off its part of the joint venture to shareholders in 1994. By then, the companys sales had topped SKr 6 billion.

After taking 1995 off, Securitas rejoined the acquisition trail in 1996, entering new markets, such as Estonia and Poland, and, with the acquisition of DSW Security, Germany. That last acquisition gave Securitas Germanys fourth largest security company, and made Germany one of its largest single markets, accounting for some 20 percent of total sales. The DSW acquisition was topped by a new acquisition in the United Kingdom, of Security Express Armaguard (SEA). The former subsidiary of Australias Mayne Nickless, SEA had been losing money in the mid-1990s; nonetheless, the purchase boosted Securitass cash-in-transit operations in the United Kingdom. The SEA acquisition also represented Securitass first entry into the United Kingdom since the split-up of the company in the early 1980s.

Other acquisitions of 1996 included La Rond de Nuit and Domen Securité in France; Sonasa, in Portugal; Timetech, in Sweden; Krupp Sicherheit, in Germany; and Inkjassaator, in Estonia. In all, the company added more than SKr 2 billion in sales through acquisitions alone that year.

Securitas bundled its consumer-oriented businesses into a new subsidiary, Securitas Direct, overseeing the companys international individual home and small business alarm systems operations, in 1997. Securitas meanwhile continued making acquisitions, particularly in France and Germany through 1997 and 1998. The companys acquisitions in these markets included Raab Karcher Sicherheit of Germany and Proteg and the Kessler Group of France. Both Proteg and Raab Karcher were leaders in their respective countries; the Raab Karcher acquisition also strengthened the companys presence in Austria and Hungary, and introduced it to the Czech Republic. In 1998, also, Securitas launched its first subsidiary operations in Latvia.

By the end of 1998, Securitass acquisition appetite had boosted its sales to nearly SKr 14 billion. One year later, the companys sales soared past SKr 25.5 billion. In that year, Securitas made its largest acquisitionand one that gave it a position as the worlds largest security services company, with a leading share of the United States market.

Company Perspectives:

Securitas business concept is to protect homes, work places and community. With a clear focus on security, we can refine security services with new concepts, and new specialized services result from this. It has been demonstrated that the more we focus, refine and develop, the greater our opportunities and our markets .

Securitass transformation came with its acquisition of famed security services company Pinkertons Inc. Paying $384 million, Securitas gained control of the 150-year-old U.S. company, founded by Alan Pinkerton in Illinois in 1850. Pinkerton, originally a barrelmaker, became the first private detective in the United States and, with a logo featuring an open eye, spawned the term private eye. Pinkertons had been acquired by tobacco company American Brands in 1983. In 1988, the company was merged into California Plant Protection; the larger company kept the famous Pinkertons name. The acquisition of Pinkertons gave Securitas a major share of the U.S. market (the company maintained the Pinkertons name for its North and South American operations) .

In 2000, Securitas swooped again, now picking up another major U.S. security company, Burns International. Burns had its start as part of the former Borg-Warner, when that industrial conglomerate acquired Baker Industries in 1977, giving it entry into the security services market. Baker Industries held the trademarks to two famed namesWells Fargo and Pony Express, acquired in 1967 from American Express. Borg-Warner proceeded to go on its own acquisition binge, buying up more than 70 companies to build one of the top security services in the United States by the early 1990s. Among its acquisitions was Burns International Security Services, founded in 1909 and acquired by Borg Warner in 1982. Under fire from a hostile takeover, Borg Warner escaped through a leveraged buyout at the end of the 1980s; yet the companys huge debt-load forced it to sell off nearly all of its operations, until in 1993 all that remained of the company was its security services division, including its Wells Fargo armored car subsidiary. That company was merged with Loomis Armored in 1997, giving Borg Warner a 49 percent stake in the newly named Loomis, Fargo & Co. In 1999, Borg Warner itself changed its name, to Burns International.

The acquisition of Burns International by Securitas boosted the Swedish security giants revenues past SKr 40 billion and, with a 7 percent share of the global security services market, made it the world leader in its still highly fragmented industry. Burns, folded into the Pinkertons operation, made Securitas the out-and-out leader of the North American market as well.

Securitas had no intention of ending its drive to consolidate the worldwide security services industry. Announcing a war chest of some SKr 12 billion, the company continued to make acquisitions as the new century began. In 2000, the company acquired B&M Beveiliging & Alermering in Amsterdam; Doyle Protective Service in the United States; Baron Security of Belgium; Micro-route Ltd. of the United Kingdom, and Ausysegur of Spain. At mid-2001, the company announced that it had agreed to pay more than $100 million to acquire full control of the Loomis Fargo Group.

By then, Securitas, which had previously been organized along its geographic operations, now restructured the company into its five key businesses areas of Security Services; Security Systems; Direct; Cash Handling Services; and Consulting & Investigations, which also provided private security services. This reorganization was meant to help the company achieve its future growth goalsby 2005, the company expected its sales to top SKr 69 billion. Given Securitass strong record of organic and external growth, the company seemed likely to secure its ambitions.

Principal Subsidiaries

Burns International Services Corporation (U.S.A.) ; Dansikring A/S (Denmark) ; Pinkertons, Inc. (U.S.A.) ; Pinkertons of Canada Limited; Pinkerton Servicios de Seguridad Privada S.A. de C.V. (Mexico) ; Protectas S.A. (Switzerland) ; Securis N.V. (Belgium) ; Securitas AS (Norway) ; Securitas C.I.T. Sp. z.o.o. (Poland) ; Securitas CR s.r.o. (Czech Republic) ; Securitas Deutschland Holding GmbH (Germany) ; Securitas Eesti Ltd. (Estonia) ; Securitas France Holding S.A.; Securitas Holding A/S (Denmark) ; Securitas Hungary RT; Securitas Oy (Finland) ; Securitas Polska Sp. z.o.o. (Poland; 95%) ; Securitas S.A. (Portugal) ; Securitas Seguridad España S.A. (Spain) ; Securitas Serviços e Tecnologia de Segurança SA (Portugal) ; Securitas Sverige AB (Sweden) ; Securitas Treasury Ireland Limited; Securitas UK Limited; Securitas Werttransporte GmbH (Austria; 98%) .

Principal Competitors

AHLS/Argenbright; Allied; Chubb plc; Command Security Corporation; Group 4 Falck A/S; Guardsmark; Home Security International, Inc.; Initial; The Pittston Company; Prosegur, Compañía de Seguridad, S.A; Protection One, Inc.; Rentokil Initial plc; Securicor plc; Transnational Security Group; Tyco International Ltd.; The Wackenhut Corporation.

Key Dates:

1901:
Kjobenhavn Frederiksberg Nattevagt is founded by Philip Sorensen.
1918:
Kjobenhavn Frederiksberg Nattevagt becomes part of future ISS Group.
1934:
Company enters Sweden.
1938:
Company takes Securitas name.
1950:
Company expands into United Kingdom, adopts Securitas International brand name.
1968:
Securitas restructures its four U.K. businesses under the name Group 4.
1974:
Sven and Jorgen Philip-Sorensen acquire control of Securitas.
1981:
Company is divided into Securitas (Sweden) and Group 4 (international) ; Group 4 is later acquired by Falck and becomes the worlds second largest security services group, Group 4 Falck A/S.
1985:
Investment firm AB Latour acquires Securitas.
1988:
Securitas acquires Swedish lockmaker Assa.
1991:
Company is listed on the Stockholm exchange; acquires U.S.-based Arrow.
1992:
Company acquires Esabe of Spain and Protectas of Switzerland.
1997:
Company forms Securitas Direct.
1999:
Securitas acquires Pinkertons Inc. for $384 million, thus gaining a major share of the U.S. market.
2000:
Securitas acquires its second major U.S. firm, Burns International, and sees its revenues surpass SKr 40 billion.
2001:
Securitas acquires full control of Loomis Fargo for an estimated $100 million.

Further Reading

de Bendern, Paul, Securitas Profit Jumps, 2000 EPS Seen up 25 Pct, Reuters, February 8, 2000.

George, Nicholas, Securitas Makes Cash Bid for Burns, Financial Times, August 4, 2000.

Hardie, Will, Securitas Sees Windfall from Euro Money Launch, Reuters, June 12, 2001.

Securitas Has 12 Bin SKR for Acquisitions, Reuters Business Report, November 4, 1999.

Securitas Takes Control of the American Loomis Fargo Group, European Report, May 30, 2001.

Swedens Market Is Smiling on Securitas AB, but Some Wonder If Buying Spree Is a Bit Much, Wall Street Journal, August 25, 2000.

Swedish Firm to Buy Pinkerton, Dallas Morning News, February 23, 1999, p. 2D.

M. L. Cohen

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