Kaba, Dorma Blockbuster Merger Announced

Two of the largest global solutions providers in the access control and door hardware market announced today that they plan to merge, forming one of the top three companies in the access products category.

Once the merger is approved in mid-May of this year, Swiss-based Kaba and Germany’s Dorma Holding will become the dorma+kaba group. A corresponding transaction agreement was signed April 29.

Dorma is a provider of access solutions and related services, and a global market leader in door closers, automatic door systems and glass fittings. Kaba is a global leader for access control, enterprise data collection and key systems.

“The combination of the two strong brands Dorma and Kaba will result in the creation of a leading company in our industry. The anchor shareholders will ensure long-term orientation, which represents another true competitive advantage in our dynamic sector,” says Ulrich Graf, Chairman of Kaba. “This merger will allow our companies to become one of the world’s largest access control companies in this highly fragmented market.”

Designated CFO of dorma+kaba Bernd Brinker revealed in a telephone news conference that Kaba and Dorma generated total sales of more than 2 billion Swiss francs ($2.1 billion) in the 2013/14 financial year, and he expects the new company to manage sales growth of between six and seven percent in local currency over the next four years.

 “We will be able to leverage our companies’ global presence and strength in our respective markets to better serve our customers and grow our new organization,” says Brinker.

Brinker added that under the terms of the deal, Kaba plans an issue of share worth 178.4 million francs which will be bought by Dorma, providing them 47.5 percent of the combined entity. A substantial portion of the proceeds will be passed on to Kaba shareholders as a special dividend of 50 francs per share. The family shareholders of Dorma and Kaba will jointly hold 27.3 percent of the new dorma+kaba Holding.

The deal is subject to approval from a meeting of Kaba shareholders on May 22. The two companies expect to complete the combination in the third quarter. The companies are targeting a payout ratio of at least 50 percent of consolidated net profit after minority interests.

“By merging our two globally established companies, we will significantly strengthen our market position. Not only do we share over one hundred years of entrepreneurial tradition and the same values, but our strategies also largely correspond with one another,” adds Dr. Hans Gummert, Chairman of Dorma.

The merged company will be listed on Switzerland's SIX stock exchange. Current Kaba CEO Riet Cadonau has been nominated to head the merged company while Kaba Chairman Ulrich Graf will chair the new firm's board of directors.

Dorma and Kaba’s technological expertise, products as well as distribution channels complement each other very well. The shared distribution and service networks cross selling, and the positioning as a one-stop-shop for security and building access solutions open up significant added growth potential for the merged company.

“Together with Kaba, we are taking a big step forward. We will broaden our offering, strengthen our global presence and increase our innovation power. This will allow us to better and more quickly take advantage of opportunities that arise through megatrends such as urbanization and digitalization,” Thomas P. Wagner, CEO of Dorma comments, adding that dorma+kaba will have production facilities in all of the industry’s key markets and will accelerate global expansion through its strengthened presence in particular in Europe, the Americas and Asia-Pacific.

Riet Cadonau, CEO of Kaba says that, “Dorma and Kaba are ideal partners in every respect and a compelling strategic fit. The planned merger will create additional opportunities for sustainable profitable growth – thereby providing added value to our clients, partners, employees and shareholders.”

Dorma and Kaba announced merger plans could have an interesting impact on the physical access-control industry in the coming years. Dorma is a provider of access solutions and related services, and the company is a global market leader in door closers, automatic door systems and glass fittings, while Kaba is a global leader for access control, enterprise data collection and key systems.

According to the most recent IHS report on electronic access control, the merger of Kaba and Dorma would make the combined company the second-largest player in EMEA’s access-control industry, second only to Assa Abloy.

Dorma began expanding its portfolio in 2012 with the acquisition of RCI -- and again in 2014 with the acquisition of Farpointe Data. While the acquisition of RCI complemented Dorma’s existing portfolio, Farpointe Data allowed Dorma to further penetrate the government-equipment category with products that are complaint with federal information processing standards (FIPS). Kaba’s acquisition of Keyscan in 2014 helped to further solidify the company’s presence in the American region and gain an additional foothold in the access control as a service (ACaaS) market.

In this merger Kaba and Dorma would combine complementary product offerings, and perhaps fill gaps in each company’s current portfolio, as they relate to physical security and entrance-control equipment. Dorma will bring to the deal door automation-control expertise (including revolving doors, swing doors, slide doors and industrial doors); while Kaba offers a larger portfolio of pedestrian-control equipment (such as turnstiles, gates and security doors), as well as hospitality and commercial electronic-locking devices.

 The family shareholders of Dorma and Kaba, who will jointly hold 27.3 percent of dorma+kaba holding, will form a strong anchor shareholder group and have signed a long-term pool agreement. Among others, they have granted each other preemption rights and have also agreed that the sale of a block of shares of 27 percent or more to a third-party buyer would require this buyer to launch a public takeover offer to all public shareholders at the same price per share.

Christine Mankel and Stephanie Brecht-Bergen (née Mankel), shareholders of Dorma say they recognize their responsibility as family business owners and look forward to supporting the new dorma+kaba group as long-term oriented anchor shareholders

Ulrich Graf, Chairman of Kaba, will chair the Board of Directors of the combined company. The CEO of Kaba, Riet Cadonau, has been nominated CEO. Bernd Brinker, who is CFO of Dorma, is the designated CFO. Representation on the group’s management bodies is to be as balanced as possible.