Securitas acquires the market leaders in France and Germany

Monday, June 29, 1998

* Securitas acquires the market leaders Proteg in France and Raab Karcher Sicherheit in Germany.
* Securitas gets two new major owners and partners.
* Sales increase by 50 percent to appr. SEK 18 billion.
* The acquisitions strengthen Securitas` position as Europe`s leading security company, creating a strong base for continued growth.

Securitas has reached an agreement with Finecco SA to acquire 100 percent of the shares outstanding in the French security company Proteg, with sales of about MSEK 3,800. The price amounts to MSEK 2,176, MSEK 1,318 to be paid in the form of 4,250,000 shares of class B Securitas AB shares to be issued to Finecco, and MSEK 858 to be paid in cash.

Securitas has also concluded an agreement with Raab Karcher AG/VEBA Immobilien Management (Raab Karcher) to acquire 100 percent of the shares outstanding in Raab Karcher Sicherheit GmbH in Germany, with sales of about MSEK 2,000. The price amounts to MSEK 1,113, to be paid in the form of 3,589,014 class B Securitas AB shares to be issued to Raab Karcher.

The new issues will be proposed to an Extra General Meeting of Shareholders in Securitas AB to be held September 8, 1998.

These acquisitions will increase Securitas` sales by appr. 50 percent, to appr. SEK 18 billion. Securitas thus strengthens its position as Europe`s leading security company, with operations in 15 countries and appr. 63,000 employees.

Proteg SA in France
Proteg is the market leader in guard services in France, with sales of about MSEK 3,800, of which guard services account for about MSEK 2,400. Alarm systems sales are about MSEK 1,100, with fire alarms accounting for about MSEK 490. The number of alarm connections is about 50,000. Cash-in-Transit services account for about MSEK 90. A small portion of the operation is conducted outside France, with most of that in Spain, where sales are about MSEK 160. The number of employees is about 15,000.
Proteg currently posts operating income of about MSEK 60, and an operating margin of about
2 percent. Significant efficiency gains can be effected through the merger and integration with Securitas` current operations in France. These gains will be derived primarily from costs for regional offices, business areas, product development, and head office, as well as from combining international operations with Securitas` businesses in each respective country.
A strong base for profitable growth in France is created with the acquisition of Proteg. The French security market is estimated to be worth about SEK 37 billion. Securitas will now become the market leader, with about 13 percent of the total market, and about 35 percent of the market for guard services. This will allow Securitas to actively pursue the restructuring of the security industry in France. Securitas` total sales, including sales of home and small alarm systems, in France, will reach MSEK 4,800 after the acquisition. The total number of employees will be 18,850.
Goodwill arising in the acquisition will be just short of MSEK 2,100, to be amortized over 20 year, which means annual goodwill amortization of MSEK 106. Financing of the cash portion of the purchase price is expected to give rise to an annual interest expense of about MSEK 34. The total annual cost of the acquisition is thus expected to be about MSEK 140.
The dilutive effect of newly issued shares for the acquisition will be about 5.6 percent, computed based on full conversion of outstanding convertible debentures.
Subject to approval by the Extra General Meeting of Shareholders, and receipt of the necessary approvals from competition authorities, the acquisition is expected to be completed by October 1, 1998.

Raab Karcher Sicherheit in Germany
Securitas acquires Raab Karcher Sicherheit`s guard services operation, with sales of about
MSEK 2,000, MSEK 180 of which is attributable to operations in Austria, Hungary, and the Czech Republic. The alarm systems business in Raab Karcher Sicherheit is not a part of the acquisition. Raab Karcher Sicherheit is the market leader in guard services in Germany, and is a significant supplier of security services to German industry.
In addition hereto, the company is a specialist in guarding, among other things, eg. nuclear power plants in Germany. Airport security and security solutions for public transportation are other important business areas. The number of employees amounts to 8,000.
Raab Karcher Sicherheit`s guard services operation currently posts operating income of about MSEK 70, and an operating margin of just over 3 percent. Significant efficiency gains will be generated through the merger and integration with Securitas` current operations in Germany. These gains will be derived primarily from lower costs for regional offices and head office. Increased opportunities of offering specialized services, such as airport security and security solutions for public transportations, are expected to contribute to increased organic growth with good profitability.
A stronger base for continued profitable growth in Germany is created through the acquisition of Raab Karcher Sicherheit`s guarding operations. The German security market, which is Europe`s largest, is estimated to be worth about SEK 40 billion. The market is fragmented, with a large number of small players. Securitas, which is market leader in Cash-in-Transit, will now also be a market leader in guard services, with about 17 percent of the German guarding market. After the acquisition, Securitas will reach about 10 percent of the total security market in Germany, thereby gaining an opportunity to actively pursue the continued specialization of security services in Germany.
Securitas` aggregate sales in Germany will reach MSEK 3,900 after the acquisition. The total number of employees will be 15,000.
Goodwill arising in the acquisition will be approximately MSEK 880, to be amortized over 20 years, which means annual goodwill amortization of MSEK 44.
The dilutive effect of newly issued shares for the acquisition will be about 4.7 percent, computed based on full conversion of outstanding convertible debentures.
Subject to approval by the Extra General Meeting of Shareholders, and receipt of the necessary approvals from competition authorities, the acquisition is expected to be fully completed by October 1, 1998.

The new Securitas
With these acquisitions, Securitas strengthens its position as the leading security company in Europe, with a market share of 10 percent of a total market estimated to be worth SEK 180 billion, and expected to grow by 5-7 percent per year. As a market leader on the two largest security markets in Europe, together accounting for almost 40 percent of the total market for security services in Europe, Securitas will be able to actively pursue the industry`s development in each respective country by specialization and product development aimed at stronger growth and profitability.
Consolidated sales are expected to increase to approximately SEK 18 billion, including full-year effects of acquisitions completed during 1997 and 1998.
Total acquisition costs in the form of amortization of goodwill and interest expenses will be about MSEK 185 on an annual basis. The dilutive effect of newly issued shares for the acquisition will be about 10.25 percent, computed based on full conversion of outstanding convertible debentures.
Over a period of time, synergy gains of about MSEK 220 - 250 will gradually be realized.
For 1998, only a marginal positive effect on income is expected, which compensates for the dilution. Earnings per share are thus not expected to be affected.
Free cash flow will be affected positively by the acquisitions.

Ownership structure
The acquisitions will result in two new international owners. Securitas` main owners propose to give these owners one seat in Securitas AB:s Board of Directors respectively. Finecco S.A. in France, will obtain 3.5 percent of the votes and 5 percent of the capital, and will be proposed one seat on Securitas AB:s Board of Directors for Mr. Phillipe Foriel-Destezet. Raab Karcher in Germany, who belongs to one of Germany`s largest industrial corporations, VEBA, with operations in electric power, chemical industry, distribution, logistics, as well as real estate and telecommunications, will obtain 2.9 percent of the votes, 4.3 percent of the capital, and will be proposed one seat on Securitas AB:s Board of Directors for Mr. Wilhelm Heilmann, Raab Karcher Group.
A total of 7,839,014 class B shares will be issued in connection with the acquisitions. The total number of shares outstanding in Securitas AB will be 84,283,167, computed after full conversion of outstanding subordinated convertible debenture notes.

Schedule
An Extra General Meeting of Shareholders in Securitas AB will be held at 4:00 p.m., September 8, 1998 at Securitashuset, Lindhagensplan 70, Stockholm. Notice for the Meeting and additional information about the acquisitions is expected to be mailed to the shareholders during the week of August 17, 1998. Subject to the approval by the Extra General Meeting of Shareholders of shares to be issued, and to the approval of the competition authorities in each respective country, the transactions will be completed effective as of October 1, 1998, and the acquired entities will be parts of the Securitas Group from that date.

Development during 1998 and beyond
Since the acquisitions are only expected to have a marginal positive effect on income for 1998, the previously submitted forecast remains in force, with earnings performance in line with the long-term trend of 20 percent of prior years. As the newly acquired units are integrated and coordinated with existing businesses in Securitas, significant synergy gains are expected to be generated beginning in 1999, which should provide significant contributions to a continued good development of earnings.

Information Meetings
The information meetings will be held both in Stockholm and in London. At the information meetings, you will have the possibility to ask questions directly to Securitas` group management.

Information meeting in Stockholm:
Time: 4:30 p.m. local time, Monday, June 29, 1998
Location: Cirkus, Djurgårdsslätten 43-45, SE-115 21 Stockholm, Sweden
Telephone: +46 8 587 987 55 Telefax: +46 8 587 987 49

Information meeting in London:
Time: 9:00 a.m. local time, Wednesday July 1, 1998
Location: The Kenilworth Hotel, Radisson Edwardian, 97 Great Russell Street, London WC1B 3LB Tel: +44 171 637 34 77 Fax: +44 171 631 31 33
Further information will be provided by Thomas Berglund, President and CEO, Amund Skarholt, Vice President, Håkan Winberg, Vice President & Chief Financial Officer, and Camilla Weiner, Investor Relations Manager, telephone +46 8 657 74 00 or +46 8 670 50 63.

Available documents