The First Facility Management Blog

ISS Facility Services, Inc., a national provider of facility services has signed an agreement to acquire building services provider BGM. The closing is expected to occur today, March 31, 2008.

BGM, which does business as BG Service Solutions, has revenues of $105 million and provides cleaning services in six states including Colorado, Kansas, Missouri, Minnesota, Florida and Utah. BGM was founded in 1972 by Ron Baker and Ron Goldsmith, and Goldsmith says, “Ron Baker and I are very pleased to place our company and dedicated employee team with the leading cleaning company in the world.”

Sonny Price, current president of BGM will remain with ISS as the president of the Midwest Region and will be responsible for the operations of the region within the ISS corporate structure.

“We are very excited to team up with BGM. I have known both Ron’s for a long while and have always admired the management team they put together and their approach to the business in building a great Company,” remarked Darrell Glover, CEO of ISS Facility Services, Inc., on the deal. “This acquisition is a great fit for ISS and gives us a very strong presence in the Midwestern states. It also gives us a strong presence in the Aviation sector which is important to us,” says Glover. With this acquisition, ISS Facility Services will have over 14,600 employees.

ISS Facility Services, Inc. is the United States company of ISS and offers a range of service solutions, from single services to fully Integrated Facility Services (IFS) that combine all of the customers’ service and support functions into one solution.

About the ISS Group
The ISS Group is a facility services group, providing integrated service solutions based on the core business areas of cleaning, catering, office support, property services, and security. The ISS Group had annual revenues of almost USD $13.4 billion in 2007 and employs more than 440,000 people in 50 countries across Europe, Asia, North America, South America and Australia.

About BGM Industries
BGM Industries has its headquarters in Kansas City, MO, and is a leading provider of cleaning services in the Midwest. In addition to cleaning services, BGM also provides property services such as building maintenance and landscaping as well as security. The company has more than 1,000 customer accounts, the largest of which are office properties and airports. BGM Industries generated 2007 revenue of about USD $105 million and has some 3,600 employees.

The Halifax Group (Halifax) announced last week its acquisition of North American Video (NAV), a worldwide provider of implementation of integrated video surveillance and security systems. Cynthia Freschi, NAV founder and chief executive officer, will retain a significant stake in the company and continue to serve with the existing senior management team. Terms of the buyout were not disclosed.

“Our partnership with Halifax will accelerate North American Video’s continued growth and expansion into new security markets while providing enhanced services and support for both existing and new clientele,” said Freschi. “NAV’s business model has been and will continue to be based on three key principles: the implementation of innovative security systems solutions incorporating cutting-edge technologies, outstanding customer service and support, and responsiveness to changing technology trends and user needs. These attributes will continue to drive our business as we pursue new and exciting opportunities moving forward.”

Freschi emphasized that NAV’s experienced personnel and on-going operations will be unaffected by the transaction. NAV is based in Brick, NJ.

“NAV is a clear leader in the security integration marketplace. We are pleased to be partnering with a management team that has built such a successful enterprise,” said Jud Hill, managing director, Halifax. “Halifax views NAV as a unique investment, not only because of the intrinsic potential in NAV’s current lines of business in the gaming industry, but also, because of the growth opportunities in new markets that include homeland security, education and financial services. Working closely with Cynthia Freschi and her management team, we look forward to implementing an exciting plan for continued growth.”

The Halifax Group maintains offices in Washington, DC, Dallas, TX, and Raleigh, NC.

Ingersoll-Rand Company Limited announced yesterday that it has executed a definitive
agreement to acquire Trane Inc., formerly American Standard Companies
Inc., in a transaction valued at approximately $10.1 billion*. Trane is a global provider of indoor climate control systems, services and solutions.

Under the terms of the merger agreement, which has been approved by the Boards of Directors of both companies, Ingersoll Rand will acquire all outstanding common stock of Trane. Holders of Trane’s approximately 200 million common shares will receive a combination of $36.50 in cash and 0.23 Ingersoll Rand shares of common stock per each Trane share. The total value for this transaction was $47.81 per Trane share based on the closing price as of December 14, 2007.

The transaction which is expected to close late in the first quarter or early in the second quarter of 2008, is subject to approval by Trane shareholders, regulatory approvals, and customary closing conditions.

Herbert L. Henkel, Ingersoll Rand chairman, president and chief executive officer, said, “The combination of Ingersoll Rand and Trane will create a global, diversified industrial company with projected pro forma 2008 revenues of $17 billion. The new Ingersoll Rand portfolio will include an $11 billion Climate Control business which will offer high value equipment, systems and services necessary for delivering solutions across the temperature spectrum for indoor, stationary, and transport applications worldwide.

“As a result of expected revenue and cost synergies, we are confident that this acquisition will improve Ingersoll Rand’s future earnings growth potential. We believe the new Ingersoll Rand will be capable of sustaining annual organic revenue growth averaging 5-7% and EPS growth exceeding 15% per year, both in excess of our former growth guidance. In particular, assuming timely consummation of the proposed acquisition, we anticipate earnings of $4.00 per share in 2008.”

Fred Poses, Trane chairman and CEO said, “For our shareowners, this offer represents an attractive price for our shares today and the opportunity to participate in a powerful global diversified industrial company in the future. Combining Trane and Ingersoll Rand’s climate control operation creates a very strong business. With the size, strength and operational effectiveness of a $17 billion global industrial company, we believe this combination is best for our customers, employees and shareowners in the long term.” Poses will remain in his position until the acquisition is completed.

“This acquisition represents a significant next step in Ingersoll Rand’s decade-long transformation to become a leading global diversified industrial company, with strong market positions across the climate control, industrial and security markets,” said Henkel. “The acquisition of Trane meets our long-term objectives of significantly increasing consistency of revenue and income streams, adding strong brands and market positions, and further strengthening the organic growth potential of our portfolio. Trane’s leadership position in the global commercial and residential climate control industry enhances our own highly regarded Hussmann and Thermo King brands.

“Trane’s demonstrated long-term organic growth rate, averaging 7% to 8% per year, compares favorably to the organic growth targets we have established for our business portfolio. Trane’s talented management team and employees have delivered consistent revenue growth and operating margins throughout all phases of the business cycle.

“We believe Trane will deliver strong growth and profitability going forward. Based upon market fundamentals such as rising energy costs and conservation initiatives, we expect solid replacement-demand for energy-efficient products and for retrofit and refurbishment of current systems. Trane’s large installed base of equipment and systems will provide profitable aftermarket growth potential. Also, Trane has the leading market position in North America, and is growing strongly and increasing penetration in international markets.

“On a combined basis, Ingersoll Rand’s climate control operations are projected to have revenues of approximately $11 billion in 2008 and will have a significant presence in all major segments of the associated industries worldwide. It is anticipated this combination will produce annual pre-tax cost and revenue synergies exceeding $300 million by 2010. Anticipated synergies include purchased material savings through supplier rationalization and procurement leverage, improvements in manufacturing costs, and lower general and administrative costs. Longer term, we will benefit from synergies related to cross selling and service revenue expansion.”

Credit Suisse, Goldman, Sachs & Co. and J. P. Morgan Securities Inc. served as
financial advisors to Ingersoll Rand, and Simpson Thacher & Bartlett LLP served as its
legal advisor. Lazard served as financial advisors to Trane, and Skadden, Arps, Slate,
Meagher & Flom LLP served as its legal advisor.

* This amount includes transaction fees and the assumption of approximately $150 million of Trane net debt.
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Ingersoll Rand held a conference call yesterday (12/17/07) to provide more detail about this transaction. Interested parties can listen to the call by visiting: www.shareholder.com/ir/medialist.cfm