March 5, 2010 / 5:47 AM / 10 years ago

Zicom to sell business units to Schneider Electric

MUMBAI (Reuters) - Zicom said on Friday it has agreed to sell two of its electronic security system business units to the Indian arm of Schneider Electric for about 2.25 billion rupees, boosting its shares.

Zicom Electronic Security Systems Ltd will sell its security business catering to the governmental and institutional markets, it said in a statement to the BSE.

Projects in these areas are capital intensive with high gestation periods and demand a high level of integrated building management technology that required high investments by Zicom, it said in the note.

“In view of this change, it seemed best to exit the business when the value is attractive and to focus on building the remaining retained business,” Zicom chairman Manohar Bidaye said in the note.

The Mumbai-based electronic security systems provider will retain its retail security and fire protection businesses, which together contributed 52 percent of the group’s revenue of 3.75 billion rupees for the nine months ended Dec. 31, it added.

Zicom said the deal was at a premium to the market price, which values the entire company at 1.43 billion rupees, based on Thursday’s close.

The sale would allow Zicom to diversify into new businesses and has identified alternative energy and aerospace engineering as potential sunrise sectors, it added.

The deal, subject to shareholders’ approval and other conditions, is likely to close in April, Schneider said in a separate statement.

Shares in the company, which surged as much as 19 percent to a 52-week high of 133.60 rupees on the news, eased to trade 15.1 percent higher at 129.30 rupees at 12:06 p.m. in a firm Mumbai market.

On Wednesday, Schneider Electric India had said in a statement it would announce a major acquisition on Friday.

In FY10, Schneider Electric India acquired two firms in India, and in January its managing director told Reuters it wants to buy more firms if they prove to be a strategic fit.

(Reporting by Ketan Bondre and Bharghavi Nagaraju; editing by Sunil Nair)

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