Carlyle to buy Tyco's Korea unit for $1.93b

ADT Korea comprises Tyco Fire & Security Services Korea and three subsidiaries that between them serve approximately 475,000 small and medium-sized enterprises, commercial and residential customers. The company provides central monitoring services, with video surveillance and dispatch, access control and other customized security solutions.

Carlyle was selected as the preferred bidder last week, reportedly beating other private equity firms including Affinity Equity Partners, KKR, IMM Private Equity and a joint effort from Bain Capital and Hahn & Co.

US-headquartered Tyco acquired a majority stake in the company - then known as Caps - in 1999, delisted it and then took full ownership. The divestment comes as part of an extensive restructuring initiative that has also seen the spin-out of Tyco's North American security unit.

"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," said Sanghyun Lee, a managing director with Carlyle's Asia buyout team.

The private equity firm's equity commitment will come from Carlyle Asia Partners IV and Carlyle Partners VI. Korea Exchange Bank, Kookmin Bank, Industrial Bank of Korea, Korea Investment & Securities and UBS have agreed to provide debt financing.

Tyco is the latest in a series of multinationals seeking to divest Korean assets. Last year, ING, which is required to exit its Asian business as a condition of a post-global financial crisis bailout, sold its Korean life insurance unit to domestic GP MBK Partners for $1.67 billion.

MBK was responsible for an even larger buyout in 2007 when it teamed up with Macquarie and selected to co-investors to acquire cable TV provider C&M for $2.4 billion across two tranches.

In the last year or so there has been increased deal flow emanating from Korean conglomerates that are under political and financial pressure to refocus on their core operations. MBK bought water purifier business Woongjin Coway from the distressed Woongjin Group for $1.1 billion while Affinity Equity Partners bought control of digital music platform Loen Entertainment from SK Telecom for $239 million.

More may be forthcoming with Hahn & Co. and IMM Private Equity both eyeing $1 billion-plus deals for Korean shipping assets from Hanjin Shipping and Hyundai Merchant Marine, respectively.

Korean buyouts reached $4.99 billion in 2013 across 27 disclosed transactions, more than double the previous year and the highest annual total on record. This pushed private equity investment in the country to a high of $9.1 billion. Korea accounted for 19% of buyout activity in Asia by transaction value in 2013.

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• Topics
• Buyouts
• Technology
• Support services
• North Asia
• buyout
• South Korea
• The Carlyle Group
• Technology