Securicor Plc

1939–2002

Operating Revenues: £699.4 million ($1.05 billion) (2000)

Stock Exchanges: London

Ticker Symbol: SCR

NAIC: 561612 Security Guards and Patrol Services; 561621 Security Systems Services (Except Locksmiths)

Securicor Plc has its eye on global leadership in its core security and distribution businesses, which contribute 97 percent of the company's revenues (communications contribute the remainder). Securicor Security offers a full range of security services, including cash collection, processing and delivery, and armored-car transport, as well as manned guarding, closed-circuit television monitoring and response operations, prison management services--including the management of the U.K. "hi-tech" prison Parc--and electronic security services and systems. In the United States, the company's acquisition of Atlanta-based Argenbright Security in 2000 has placed Securicor as the top player in the U.S. aviation security market. Securicor plans to increase its focus on its security operation, building it into one of the world market leaders at the turn of the century. The company intends to accomplish this goal through an aggressive acquisition program--by the end of 2001 Securicor had already doubled its security sales to more than £1.3 billion, with plans to reach £2 billion in the near future. The company's other major division is Securicor Distribution, 50 percent of which was sold to Deutsche Post in 1999. The company's distribution and logistics activities operate under Omega Express--part of DP's Euro Express network--and other brand names, and is the United Kingdom's leading same-day business-to-business delivery company. In addition to express parcel delivery services, Securicor Distribution also provides container transport and freight haulage, third-party distribution and warehouse management, and vehicle fleet services. The third wing of the company, communications, formerly included Securicor's 40 percent interest in BT's Cellnet mobile telephone subsidiary; the company also held failed mobile phone company Securicor Wireless in the United States, which was disposed of in 2001. The new, slimmer Securicor posted nearly £700 million in 2000, with operations in some 40 countries. The company is led by Chairman Neil Macfarlane and Neil Buckles, who is expected to be formally appointed as CEO in 2002.

Protecting the Posh in the 1930s

Securicor traces its roots to the posh neighborhoods of pre-World War II London. The company was founded by a retired member of the Liberal government and featured a team of a dozen guards riding bicycles among the large homes of the city's wealthy neighborhoods. The guards, who wore old police uniforms, were meant to deter burglaries by their mere presence. Night Watch Services, as the company was called, did well given the increasing insecurity leading up to the outbreak of the war. In 1939, the company was taken over by two friends, the Marquis of Willingdon and Henry Tiarks, who changed the company's name to Night Guards. The name change brought the company under fire from the government, notably from the Labour party's George Lansbury, who charged that the company was "the first halting step down the road to fascism." The government's concern over the rise of private armies on British soil, and the outbreak of war in 1939, brought a quick close to Night Guards' activities.

Willingdon and Tiarks restarted the company after the war, now directing it toward industrial security services. The company's new niche proved more fruitful and the company quickly signed up new clients, extending its guard services to factory installations and commercial facilities. The company established stringent hiring practices, such as demanding that applicants provide continuous 20-year employment histories, or back to their school years for younger candidates. Night Guards also began providing on-the-job training for its new hires.

The new, slimmer Securicor posted nearly £700 million in 2000, with operations in some 40 countries.

1923–1981

By the beginning of the 1950s, the company's payroll had grown to more than 150 guards. In 1951, the company had outgrown its name, and Night Guards became "the Security Corps." Government alarm over the militaristic tone of the name soon led the company to a compromise; in 1953, the company adopted the name Securicor.

At the end of the 1950s, Securicor employed more than 300 guards. By then the company had already begun to branch out from its original guard service. In 1957, the company established an armored car service, acquiring the Armoured Car Company to implement cash-in-transit services. The company had also begun to develop a private two-way radio network, dubbed HELP, for "Haulage Emergency Link Protection."

At the beginning of the 1960s, Securicor had hardly begun to expand beyond its London base. Growth was to be difficult as the company faced a raft of competitors. In 1960, Willingdon and Tiarks opted out of the company's future, selling it to Associated Hotels, then owned by Denys Erskine, and originally founded in 1923. Erskine's brother Keith took over as head of Securicor.

Under its new owners, Securicor diversified into new areas. Its private radio network led it to form a partnership with automotive assistance company AA, combining the two company's radio networks to form the LINKLINE network. This experience in turn provided the basis for the company's later foray into the communications sector in the 1980s. Securicor also expanded overseas in the 1960s, targeting Malaysia, where the company modified two of its armored vehicles for operations in that country's tropical climate, and then Hong Kong, which became the base for Securicor's further expansion throughout the region.

Meanwhile, Securicor's cash-in-transit operation had expanded to include other document and data delivery services for its bank and other customers. The company soon added parcel deliveries to its delivery services and by the end of the 1960s the company had grown into a full-service parcel and document delivery service. This operation was given a further boost in the mid-1970s, when a long strike at the British Postal Service sent customers to the growing number of delivery services operating in the United Kingdom at the time. Securicor formed a new subsidiary, Securicor Omega Express, and began offering dedicated business-to-business delivery services in 1971. In that year, also, Securicor went public on the London Stock Exchange.

Securicor continued to diversify within its core businesses, acquiring a bodyworks business in order to develop its own armored vehicle designs, and entering the electronics field through another acquisition so that it could begin designing and marketing alarm systems. During the 1970s, the company moved onto the European continent, and also targeted Kenya, Zambia, and other African markets for its international expansion.

Targeting Security for the 21st Century

Securicor's acquisition of the United Kingdom's Pony Express in 1981 helped to expand its distribution operation beyond business-to-business parcel delivery to include nationwide same-day delivery services. The company was most known, however, for its armored vehicle services, and security services in general remained Securicor's mainstay. Yet at the beginning of the 1980s, competition in the cash-in-transit market was becoming fiercer, and Securicor, by then led by Chairman Peter Smith, began looking for new areas for growth.

1984–1999

Securicor's two-way radio network partnership had by this time grown into the Relayfone service, which connected a mobile radio network to the public telephone system. This system was largely devoted to enabling Securicor to communicate with the drivers of its armored and delivery vehicle fleets. Yet Smith saw mobile communications as a potential growth area for the company and began looking about for opportunities for extending its applications to a larger public.

In the early 1980s, the British government was preparing to grant the country's first mobile telephone licenses. One of these went to Racal, which later became Vodaphone. The other was to be granted to British Telecom, which then held the monopoly on the country's fixed-line telephone system. The government was reluctant to give over full control of the mobile license to BT--for fear that BT might extend its monopoly into the mobile telephony ring as well--and a condition to the granting of the license was that BT had to bring in a partner.

In 1984, Securicor stepped forward as BT's partner in what became the Cellnet mobile telephone network. For a mere £4 million, Securicor acquired 40 percent of Cellnet. Securicor, however, was never to take an active role in the development of Cellnet, but instead allowed BT to control development of its investment. At the time, the move appeared a gamble--in the early years, mobile telephony grew very slowly. Telephoning in public became stigmatized, not least because of the bulky and expensive telephones in use at the time.

Nonetheless, Cellnet and other mobile telephone providers made steady progress through the decade, and Securicor's stake in Cellnet slowly rose in value. By the 1990s, and particularly as mobile communications became increasingly acceptable to the consumer public, Cellnet had grown in value. By the mid-1990s, Securicor's 40 percent share in Cellnet was worth more than its security and distribution businesses combined. These businesses had grown too, however, as Securicor extended its operations into Central Europe and the Caribbean. The company had also managed to combine its distribution and communications interests when the company joined a partnership to develop the Datatrak vehicle tracking system, which the company acquired in 1991.

As it entered the 1990s, Securicor restructured to emphasize the diversified nature of its operations, regrouping its businesses into three primary divisions: Security, Distribution, and Communications. Distribution was boosted in 1992 with the acquisition of part of Federal Express's business in the United Kingdom. That division grew further into the middle of the decade with the 1993 purchase of Scottish Express, extending the company's reach into the northern regions of the United Kingdom. Two years later, Securicor entered the logistics arena when it acquired Russell Davies Group, adding that company's container shipping operations. Another logistics unit, John Miller, based in Scotland, was added in 1997. Meanwhile, the company moved to crack into the United States mobile communications market, acquiring a controlling share of Intek Global. After increasing its position to full control in 1999, that company was renamed Securicor Wireless.

Securicor's security services wing was also expanding, and especially reaping the benefit of the continued privatization of much of the United Kingdom's formerly government-controlled industries. Such was the case in 1994, when the company won a £96 million contract to provide prisoner escort services to the London courts system. In 1997, Securicor added prison management to its list of activities when it acquired the contract to design and manage the high-tech Parc prison. Securicor also joined in on the growing trend of installing closed-circuit camera systems in the country's towns and cities, offering CCTV monitoring and response services.

The coming explosion of the mobile telephone market was already apparent by the mid-1990s. Competition in that market was heightened when new operators, Orange and One2One, joined the market. Vodaphone too was growing rapidly, while Cellnet, limited by its ownership structure and furthered hampered by management mistakes, found itself under pressure. The British government, however, refused to allow British Telecom to acquire full control of the company.

Securicor was allowed to sell its stake at last in 1999. By then, however, it was too late. While Vodaphone had increased its market capitalization to more than £32 billion--and then, after acquiring Airtouch, to nearly £88 billion--Cellnet had fallen far behind. Securicor was forced to accept just £3.15 billion for its 40 percent stake. While this represented a handsome gain on the company's original £4 million investment, the low price sparked a round of harsh criticism from Securicor's institutional investors, which felt the company should have negotiated for a higher price for its shares.

1999–2002

The disposal of the Cellnet stake led to a wider shakeup of Securicor's operations. In 1999, the company sold off half of its distribution and logistics business, placing it into a 50-50 joint venture with Deutsche Post, which was expanding its Euro Express network. Securicor then took over management of Euro Express's U.K. operations. Securicor now turned its focus toward expanding its security operations, beginning an active acquisition program at the turn of the century.

At the end of 1999, Securicor acquired Securewest's U.K. guard operations. Two months later, the company acquired another guarding services company, Secureop UK. Two cash-in-transit companies were acquired in March and April 2000, those of Guardforce Limited, based in the United Kingdom, and Loomis Armored Car Service Limited, which represented the company's entry into the North American market. The company extended its cash-in-transit operations to the European continent in August of that year, with the purchase of Germany's GWK GmbH.

At the end of 2000, Securicor expanded still further into North America, and particularly into the United States, when it acquired Gray Security Services, with main operations in South Africa but also in the United States and Europe. Then, in December 2000, the company bought Argenbright Security Inc. Based in Atlanta, and subsidiary to AHL Services, Inc., Argenbright was the largest specialist in aviation security in the United States. That purchase was followed by the acquisition of another AHL subsidiary, ADI Group, which provided aviation security services in Europe.

Securicor was shaken by the September 11, 2001 terrorist attacks, which placed a harsh spotlight on its aviation security services wing. The company faced added difficulties in the United States as well, as it was forced to abandon its attempt to enter the mobile communications market in that country. At the end of September 2001, the company announced that it had been forced to sell its Securicor Wireless subsidiary for a "nominal consideration only," rather than the £36 million price earlier announced.

CEO John Wiggs, who had guided the company through much of the previous decade, announced his retirement for 2002. Named to take over was Nick Buckles, a 15-year veteran of the company. Buckles vowed to continue the company's transition to a global security services powerhouse. Indeed, as the company approached the end of 2001, its acquisition drive had enabled it to double its security-related revenues, which were expected to top £1.3 billion for the year. The company set its sights on the global leadership position, planning to drive up its turnover to more than £2 billion.