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Carlyle in $1.93bn buyout of Tyco’s Korea units

Carlyle has agreed to one of Korea’s largest buyouts, beating a flock of global PE bidders.

The Carlyle Group will acquire a 100 percent stake in ADT Korea, Tyco International's Korean security business, for $1.93 billion, according to a statement from the firm.

Carlyle will buy Tyco Fire & Security Services Korea and its subsidiaries (ADT Caps, Capstec and ADT Security), which form ADT Korea. 

The deal is Korea’s largest US dollar buyout since 2008, the statement said. 

For fiscal 2014, ADT Korea is expected to generate revenue and operating income of $600 million and $125 million, respectively, with an EBITDA margin of 30 percent, according to Tyco. It has 7,500 employees and 69 branches in Korea.

“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, managing director on the Carlyle Asia buyout team, in the statement. 

“Korea is one of the few countries in Asia that generate stable economic growth along with consistent deal flow of large buyout transactions.”

ADT was circled by several global firms. In December, Kohlberg Kravis Roberts and Bain Capital emerged as additional bidders along with Affinity Equity Partners, CVC Capital Partners and MBK Partners, PEI reported earlier.

Carlyle emerged as the preferred bidder in late February.

Debt financing for the deal came from Korea Exchange Bank, Kookmin Bank, Industrial Bank of Korea, Korea Investment & Securities and UBS, the statement said. The investment will be made from Carlyle Asia Partners IV, a $3.5 billion vehicle expected to close by year-end, and from Carlyle Partners VI. 

Foreign corporates with Korea operations are in deleveraging mode, either because they’ve become more bearish on Asia, or because they’ve come under pressure from headquarters to dispose of assets.

In fact, Korea’s largest deal last year was MBK’s €1.27 billion purchase of ING Korea Life Insurance from the restructuring Netherlands-based parent.

The country’s large family-owned conglomerates are also rightsizing their operations, resulting in corporate carveout opportunities. Hahn & Co and Vogo Investments are among the Korea-based firms that last year completed buyouts resulting from corporate divestitures.

Carlyle has invested $920 million of equity in 17 transactions in Korea as of 2013. Investments in Korea have included KorAm Bank, Hyundai HCN, EO Technics, Tapex, and Yakjin Trading.

In Asia, Carlyle last month exited a majority stake investment in India-based Cyberoam Technologies to UK security software firm Sophos, and in January the firm sold 100 million shares in Haier Electronics Group, a Hong Kong-listed electronic appliances business, in a deal valued at $285 million, PEI reported earlier.