The news that Thomas Berglund - chief executive at security solutions giant Securitas - is breaking up the company and listing three divisions on the financial markets has sent shockwaves through the industry.

In conversation with Andrew Davidson of The Sunday Times (issued dated 19.2.2006), Berglund announced his intention to sell-off three global divisions - cash handling, security systems and alarms. In turn, Securitas will shed approximately one third of its estimated £4.8 billion annual turnover and £460 million profit. The company will cede its No1 world ranking. The only part of the business Berglund wants to retain is the security guarding arm.

Given that this industry stalwart has such a strong track record, it would be a brave man who questioned his motives. As boss of Securitas for the past 13 years, Berglund has been shrewd in plotting the group's growth (mainly by acquisition) across Europe and America. Now, his intention is to build the business back post-sale as a result of buying guarding operations in the UK, Latin America and Asia. Berglund predicts that the company's turnover and profits will be back at 2005 levels "within a few years".

Berglund has tried this tactic before, don't forget, selling locking systems developer Assa Abloy in 1994. Now, as then, he believes that the company's current divisions will enjoy greater value if they stand alone.

Could this be a tactical move to put pressure on G4S - another multi-divisional company - to do the same? If so, one suspects that G4S chief executive Nick Buckles would not choose to replicate his competitor's tactics.

Berglund wants to be the No1 provider in Europe and America (which, together, represent 75% of the total market). It has taken Securitas some time to grasp the US market, and now Europe is top of the agenda. He will certainly be keen to prove that the company's reduced size does not inhibit its ability to buy in the UK, where Securitas ranks a lowly fifth.

For now, it's likely that Berglund will wait for licensing to bed down, assessing how the regulatory process affects rivals before making his move. If the Swede is serious about being No1 in the UK , he'll surely have to go for broke and consider buying one or more of the current Top 4 players other than G4S. That would make matters very interesting.

Source

SMT