Scout Security reels in industry giant Prosegur to extend access to global market

Home security provider Scout Security (ASX: SCT) has made a move to extend its overseas market presence after unveiling a strategic partnership with multinational security company Prosegur Compañía de Seguridad, a key player in the global private security market.

Earlier today, Scout announced it had executed a double-barrelled deal including both a partnership and an investment of up to US$5.3 million (A$7.4 million) that is aimed at supporting the company’s marketing activities in the US, Europe and Latin America.

The deal is expected to grow the company’s market share and significantly increase its market sales. The commercial arrangement will involve Prosegur distributing Scout’s connected home security products in Spain, Portugal, Argentina and Chile.

Scout says it considers the multimillion-dollar deal to be a strategically important agreement offering additional potential revenue streams and scalability in large commercially attractive markets.

“Working with such a well-regarded global company to help grow sales of our products in Europe and Latin America is another key milestone validating Scout’s offering and represents a huge opportunity to jointly expand our market presence,” said Dan Roberts, CEO and co-founder of Scout Security.

“The partnership will ensure we are well-funded to execute on our go-to-market plans and will allow us to tap into what we believe is outstanding potential to build a strong book of business in the fast-growing DIY home security space,” he said.

Deal analysis

Prosegur’s investment includes a placement of 10,837,368 shares at an issue price of $0.275 per share to raise approximately A$2.9 million and a contemporaneous issue of 16,005,508 options to acquire further shares, meaning that Scout could receive further funding to the tune of A$4.5 million.

The investment has been done at a 41% premium to yesterday’s market close and means Prosegur will immediately own almost 9% of Scout Security.

The partnership marks a significant milestone for Scout given that Prosegur is a global leader in the private security sector, spread across three distinct business units – Prosegur Security, Prosegur Cash and Prosegur Alarms.

Prosegur is an industry giant that provides companies and households with reliable security services and uses next-generation market solutions which Scout could help improve with its own development.

Last year, Prosegur reported sales of €4.29 billion (A$6.7 billion) and staffs a team of over 175,000 employees. Via today’s deal, Prosegur becomes the latest heavyweight company to stock Scout’s products and joins other industry leaders such as Stanley Black and Decker, Walmart and existing Scout shareholder Amazon as Scout distribution partners.

Extended business partnership

In tandem, Scout and Prosegur have entered into a commercial agreement under which they have agreed to negotiate a formal arrangement over the next 18 months to grant Prosegur exclusive rights to distribute Scout’s full suite of branded security products into Prosegur’s key monitoring business markets of Spain, Portugal, Argentina, Peru and Chile.

According to Scout, it also intends to grant Prosegur exclusive rights in relation to its products and technology, while Prosegur has agreed to provide Scout access to a “range of opportunities and strategic services”.

The parties have identified a significant opportunity to increase the customer base in the alarms industry by offering a broader range of products and services such as DIY security systems.

“The dynamics observed in the US market are the path to future developments in our markets in the residential monitoring business,” said Leonardo Gutiérrez, CTO of Prosegur Alarms.

“We are partnering with one of the most innovative and client-oriented companies in this segment, from whom we are keen to learn and to open our ecosystems to boost their growth.

“We are aligned with Scout’s team on how we envision the future of our industry and we have high expectations for this partnership,” said Mr Gutiérrez.

News of this morning’s partnership between Scout and Prosegur was well received by investors, helping Scout shares to rise by over 10% up to $0.215 per share.