BCE Inc. is getting into the home monitoring business in its most important markets with a $166-million deal to acquire AlarmForce Industries Inc.
The Montreal-based communications and media giant announced Monday evening that it has reached an agreement to acquire AlarmForce, which has more than 100,000 home and business security monitoring customers in Canada.
Shares of AlarmForce skyrocketed over 71 per cent in Tuesday trading on the Toronto Stock Exchange, matching the premium on the offer.
BCE's biggest rival in the residential market is Rogers Communications Inc., which launched its Smart Home Monitoring product in 2011. Until now, BCE did not have a competitive offering in the key provinces of Ontario and Quebec (it has home monitoring services in Atlantic Canada and Manitoba through its acquisitions of Bell Aliant and Manitoba Telecom Services Inc., respectively).
While home monitoring itself is a relatively small business, it can be bundled with other services and could become more important as telecom providers fight for dominance of the "connected home."
AlarmForce is perhaps best known for its television commercials featuring a hard-to-forget jingle and the earnest sales pitch of Joel Matlin, who founded the company in 1988.
Mr. Matlin had a falling out with AlarmForce in 2013, when the company terminated him as CEO in the midst of a strategic review. He launched a wrongful dismissal lawsuit and settled the case in 2016 after reaching an undisclosed agreement with AlarmForce.
Earlier this year, AlarmForce announced the sale of its subscriber base in the U.S. for about $15.3-million.
BCE has agreed to pay AlarmForce shareholders $16 per share in an all-cash offer for a total "equity value" of $184-million.
A BCE spokesman said AlarmForce has a "net cash position," which brings the total value of the deal from BCE's end to about $166-million.
AlarmForce's board supports the deal, noting in a press release the price represents a 71-per-cent premium to Monday's closing price of $9.34.
Shareholders can also opt to receive BCE common shares rather than cash up to a cap of 49.5 per cent of the total equity value of the deal.
AlarmForce shareholders with ownership of about 72 per cent of the total shares in the company have entered into voting support agreements in favour of the transaction. The deal will be done through a plan of arrangement that requires court approval as well as a shareholder vote. It is expected to close in early 2018.