Canada’s security services market is expected to be worth $8.6 billion in 2022, and SSC Security Services Corp (TSXV:SECU) (OTCQX:SECUF) appears to be best positioned to become a leader in this market. Founded in 2012 as an agriculture commodity streaming company, the company later transitioned into the security services business by acquiring privately-held SRG Security Resource Group Inc. in February last year.
Today, SSC announced that it has entered into a definitive agreement to acquire Avante Logixx Inc. (TSXV:XX) (OTC:ALXXF). The Toronto-based company provides full-service, elite security solutions for residential customers, in addition to premium security protection for some of the biggest enterprise and commercial clients across Canada.
The acquisition will create the largest publicly-traded security company in Canada. It will bring together two highly-experienced and complementary management teams who will be able to leverage SSC’s massive, liquid balance sheet and Avante’s well-established security platforms.
SSC agreed to acquire all of the issued and outstanding shares of Avante in a deal that will see shareholders receive a combination of cash and common shares as follows: $0.52 per share of Avante in cash plus 0.4155 of an SSC Share for each Avante Share held. The deal represents a 62% premium to the closing price of the Avante Shares on the TSXV as at yesterday’s closing price.
On a pro forma basis, the new venture should generate approximately $117 million in annual revenue. This is thanks to significant cost synergies expected to be realized by eliminating the cost of maintaining both companies as different publicly-traded companies and streamlining duplicate overhead costs.
“This is our third acquisition in just over a year, giving us critical mass across the country in the security business. This acquisition represents a critical step towards solidifying our position as a national player in both physical and cyber security services across Canada, coast to coast. Bringing ASI and LSI into the family of SSC security companies significantly accelerates us toward that objective, and we are excited for what the future holds,” said Doug Emsley, Chairman, President & Chief Executive Officer of SSC.
With an increasing number of individuals and organizations appreciating the need for heightened security in their everyday lives, the acquisition certainly bodes well for SSC.
