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Redefining the market dynamics, Tyco International Ltd. recently inked an agreement to acquire Exacq Technologies, an open architecture video management systems (VMS) developer for security and surveillance applications, for $150 million in cash.

The acquisition is in line with Tyco’s growth strategy and strengthens its position in the video security market. Exacq is a leading player in the VMS sector with a diverse product portfolio that ranges from a single camera application to large integrated systems incorporating thousands of camera applications. Most of these complement the existing product range of Tyco Security Products business unit. Post-acquisition, Tyco therefore intends to integrate the acquiree with this business unit, resulting in annualized revenues of $75 million in fiscal 2014.

We remain bullish on Tyco’s fortunes based on the relative stability of the global security markets as well as high and predictable cash generation, limited balance sheet risk and easy cost-out opportunities. The company’s solid balance sheet and liquidity position are also potential catalysts.  

Tyco provides latest fire protection and security products and services to more than three million customers across the globe. Tyco has more than 70,000 employees in over 1,000 locations across 50 countries, serving various end markets, including commercial, institutional, governmental, retail, industrial and energy, residential and small business.

Tyco currently has a Zacks Rank #3 (Hold). Other stocks that look promising in the industry include ITT Corporation , Hutchison Whampoa Ltd. , and Compass Diversified Holdings , each carrying a Zacks Rank #2 (Buy).

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