Securitas Buys Diebold Security NA for $350M

Going back as far as the early 70's, guard companies have tried to enter the electronic security systems market, saying that they wanted to be "total security solutions providers".

With few exceptions, guard company owned systems providers have performed poorly, producing mediocre quality installations, and providing less than an acceptable level of service. Usually within just a few years, the guard company spins off the systems business, saying it wants to focus on its "core competencies". I have seen this scenario repeat itself dozens of times over the last 40 years.

Managing security guard operations and managing a security systems business are two entirely different things. Treating systems engineers and technicians like you treat security guards causes talented people to flee. Executives in the guard industry are also used to predictable revenue streams and consistent profit margins. They are often baffled by the uncertainty of the systems installation business ("why did it take you 2 hours to install a camera at one location, and 8 hours to install the same camera at another location?...)

Btw, SDM has consistently estimated / cited Diebold's North American system integration revenue at $500 million or more, which is evidently way off what it actually is.

In my region, Diebold used to have a significant presence in banking. However, over the last decade or so they've lost many of those accounts.

I know multiple regional institutions that have flipped to other integrators. So, local problems have been obvious.

I have been in business against Diebold for 30 years. They were Goliath to my little David. As Brian mentions, they have lost some of their ability to sway customers in the most recent decade. For years they have offered a one-stop shop for banking customers. The most important of which was easily the ATM machine and software products. They offered the steel, the pneumatics, the drive-ups, the paper, the pens and the security. They literally have an on-line catalogue business that customers can use for replenishment. They figured out the banking verticle quite well a long time ago. But the hook was always the ATM and it's associated needs. Customers have literally told me that "if I have to have them on-site for the ATM, why not just have them handle the security as well." It has taken years and a lot of work to break that stranglehold.

I don't pretend to know what Securitas has in store for the security portion. My educated guess is they will use it to help compliment the guard business. That is only natural. This purchase will open up some doors for them that they could never seem to open on their own. Financial institutions have cash on hand, and often need guards to protect that cash. And hey, as long as we are here.....

At the same time, there are 1100 Diebold employees. They are not just going to lay down and stop. A lot of them are very good at what they do. Don't expect them to just roll over and quit. They won't.

If you have made your bones on that verticle, and we in large part have, things might just get a little, just a smidge easier. That hook or link, the ATM, is no longer there and that is huge. At least a few die-hard Diebold customers will look around the landscape now; they might be enticed to look at options. Over time, this will make some difference. I honestly just never thought I would live to see it.

That video is trippy. It's rare to hear someone speak with a slower cadence than President Obama.

Then the twisted logic of "We really wanted to grow the business, so we sold it!", along with anthropomorphic characterization of Diebold ES needing a better home than they could give...

@Mark, according the video, for financial service oppurtunities, Securitas and Diebold will provide a joint offering.

FWIW, in North America at least, I'm thinking the percent of people who could name a Herman Hesse book is in the single digits.