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Adam Bannister is a contributor to IFSEC Global, having been in the role of Editor from 2014 through to November 2019. Adam also had stints as a journalist at cybersecurity publication, The Daily Swig, and as Managing Editor at Dynamis Online Media Group.
July 6, 2015

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Mooted Allegion-SimonsVoss Merger Reflects Growing Demand for End-to-End Security Solutions, says IHS

simonsvoss 2Following the recent announcement of a possible merger between Kaba and DORMA further consolidation in the access control market is afoot.

Should the acquisition of SimonsVoss by Allegion  go through – the merger requires approval from the German Bundeskartellamt, which blocked the mooted merger of ASSA ABLOY and SimonsVoss in 2008 – it would create the second-largest access control player in the Europe, Middle East and Africa (EMEA) region.

Trailing only ASSA ABLOY in terms of size the new company would sit just above the newly merged composite of Kaba, which was established in 1862 and operates in more than 60 countries, and German door technology pioneer DORMA (whose business development manager recently spoke to IFSEC Global).

Allegion was spun off from Ingersoll Rand in 2013, replacing JC Penney on the S&P 500. It sells a wide range of security technologies through multiple subsidiaries including Kryptonite, Brio and Von Duprin.

SimonsVoss is an access control specialist headquartered in Germany. The company generated sales of approximately €52m in 2014.

Well-rounded portfolio

Writing in the firm’s latest research note IHS principal analyst for Security & Building Technologies Blake Kozak offered his thoughts on the benefits of an Allegion-SimonsVoss merger for the two brands:

“SimonsVoss, the world’s largest supplier of digital cylinder locks, currently has limited penetration in the Americas, so this move will certainly help the company enter this highly competitive region. Furthermore, the acquisition will help create a more well-rounded portfolio for both companies.

“IHS estimates that the majority of SimonsVoss revenues are generated from electronic locks and credentials, while Allegion has a more diverse portfolio that spans wall readers, panels, software and electronic locks.”

As customers increasingly seek end-to-end solutions, the access control market, like the surveillance sector, is witnessing a sustained period of consolidation.

“For the overall electronic access-control market, larger companies are starting to come together to provide seamless solutions, increase in-house expertise and expand the supply chain with a global focus,” explained Kozak.

“There have been many mergers in the past; however, most were regional and specific. We are now seeing many more high-value acquisitions that immediately affect market share rankings.”

How future consolidation will unfold and what extent remains unclear, he admits.

“If access-control companies continue to merge and expand in this manner, the move toward more open standards may take a step backward, because end users will have wider product ranges and greater expertise from a single source.

“Even so, IHS expects these types of acquisitions will continue, as suppliers bolster their positions, not only on a regional basis, but also to take advantage of end-user growth (eg, residential, utilities, healthcare) and services (eg, ACaaS and VSaaS).

“It remains to be seen if video and access-control companies will cross over and provide a more fully integrated solution, or if companies will continue to enrich their current portfolios on a more linear path. One key acquisition strategy could be centred on capabilities and expertise across multiple disciplines.

“Today it is becoming increasingly crucial for companies to have IT, software and platform expertise, in addition to equipment. These acquisitions will increasingly focus on helping companies expand beyond components.”

Said David Petratis, chairman, president and CEO of Allegion: “SimonsVoss is highly complementary to Allegion’s portfolio and provides sound synergy opportunities. By adding SimonsVoss to the Allegion family of brands, we are expanding our technical expertise and solidifying our global leadership in electro-mechanical convergence.

“We believe SimonsVoss has strong growth prospects and established channel partners in a number of international markets, allowing Allegion to expand its product offering, while Allegion’s demand creation capability will benefit the SimonsVoss brand.”

SimonsVoss CEO Bernhard Sommer said: “We are pleased with what we have achieved with the active support of HgCapital throughout our partnership. Allegion’s global footprint in both the commercial and residential security markets will help drive new growth opportunities for us.

“At the same time, SimonsVoss can contribute industry-leading technology to help Allegion develop more security solutions for unique customer needs. This is a great fit for both companies, and we look forward to joining the Allegion family.”

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