SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 18, 1998
PROTECTION ONE, INC.
(Exact name of Registrant as specified in charter)
Delaware 0-24780 93-1063818
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
6011 Bristol Parkway 90230
Culver City, California (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (310) 338-6930
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ITEM 5. Other Events.
On October 19, 1998, Protection One, Inc. announced the entering
into of an agreement to acquire Lifeline Systems, Inc. (the "Merger Agreement").
The Press Release announcing the Merger Agreement is filed herewith as Exhibit
99.1.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press Release dated October 19, 1997, relating to the Merger
Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROTECTION ONE, INC.
(Registrant)
Date: October 28 , 1998 By: /s/ John W. Hesse
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John W. Hesse
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Description
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99.1 Press Release dated October 19, 1998, relating to the Merger
Agreement.
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EXHIBIT 99.1
FOR FURTHER INFORMATION CONTACT:
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Protection One Lifeline
Mr. John E. Mack, III, Executive Vice Mr. Ronald Feinstein
President Business Development (310) 342-6322 President and
Protection One, Inc. Chief Executive Officer
(617) 679-1000
Lifeline Systems, Inc.
www.protectionone.com www.lifelinesys.com
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FOR IMMEDIATE RELEASE
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PROTECTION ONE ANNOUNCES AGREEMENT TO ACQUIRE LIFELINE SYSTEMS,
INC., THE LEADING PROVIDER OF PERSONAL EMERGENCY RESPONSE SERVICES
Culver City, California, October 19, 1998 - Protection One, Inc. (Nasdaq:
ALRM), the second largest monitored security firm in the nation, today announced
that it entered into an agreement to acquire Lifeline Systems, Inc. (Nasdaq:
LIFE), the leading provider of personal emergency response services ("PERS") in
North America for approximately $174 million or $29.74 per share in cash and
common stock of a newly formed holding company for Protection One, based on the
number of currently outstanding Lifeline shares. Under the terms of the
Agreement, which has been approved by the Boards of Directors of Protection One
and Lifeline, each Lifeline share will be converted into the right to receive
$14.50 and a certain number of shares of holding company common stock based on
the average closing price of Protection One's common stock prior to the
consummation of the transaction and adjusted for a variable exchange rate. Based
on the closing stock price of Protection One common stock on October 16, 1998,
each share of Lifeline common stock would have been converted to the right to
receive shares of holding company common stock worth approximately $15.24. The
acquisition will be accounted for as a purchase and is intended to qualify as a
tax-free reorganization to the extent of the holding company common stock
received in the transaction.
Lifeline provides 24-hour monitoring to mature seniors in their homes.
Established in 1974, Lifeline has a strong history of providing caring service
to over five million subscribers since its founding. PERS provides a
high-quality alternative to home care and long-term care, thereby enabling
independence at home for the elderly subscribers. Lifeline offers equipment and
monitoring services to over 400,000 subscribers on a co-branded basis through
its strong relationships with over 2,200 community hospitals in all 50 states
and Canada. Lifeline centrally monitors the majority of its subscribers from its
response centers in Cambridge, Massachusetts and Toronto, Canada. The remainder
are monitored locally in community hospitals.
James M. Mackenzie, Jr., Protection One's President and Chief Executive
Officer said, "We have been seeking additional product and service offerings
that fit within Protection One's strategy to provide high quality security
monitoring services, and Lifeline's personal emergency response
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business is a good fit with Protection One's core business. Lifeline enjoys the
leading market position in an attractive demographic segment and has a
reputation for offering high quality services. We believe we share with
Lifeline's management a common strategy of growing rapidly, offering innovative
products and services, and developing long-term value for shareholders. We are
excited to have the Lifeline management team join us and expect that they will
make a significant contribution to Protection One's continued success."
Mr. Mackenzie went on to say, "we believe the acquisition of Lifeline will
make Protection One the largest provider of residential monitoring and security
related services in North America based on the approximately 1.9 million
subscribers the company will have as a result of the acquisition, over 86% of
which will be residential subscribers.
Ronald Feinstein, Lifeline's President and Chief Executive Officer added,
"Protection One, as a leader in the security monitoring industry, provides
Lifeline with a strong partner with which to accelerate our growth through
further market penetration and acquisitions. This merger provides us with the
opportunity to more rapidly grow our subscriber base, to offer enhanced services
to our customers and to enter international markets. We believe this transaction
represents excellent value to our shareholders."
In connection with the acquisition, Protection One will establish a new
holding company, of which both Protection One and Lifeline will become wholly
owned subsidiaries. Each outstanding Protection One share will be automatically
converted into one share of the new holding company and approximately 7.7
million shares will be issued to Lifeline shareholders, based on the number of
currently outstanding Lifeline shares and Protection One's October 16, 1998
closing price of $11- 9/16. The number of shares of Protection One common stock
to be received by Lifeline's shareholders will be based on the average closing
price of Protection One common stock for the ten days ending three days prior to
Lifeline's shareholder meeting to be held in connection with the transaction
(the "Average Closing Price"). The number of shares of holding company common
stock to be received by Lifeline shareholders per share of Lifeline common stock
will be as follows:
(A) 1.7857 if the Average Closing Price is less than $7.00;
(B) the quotient obtained by dividing (x) $12.50 by (y) the Average
Closing Price, if the Average Closing Price is equal to or greater
than $7.00 but less than $8.19;
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(C) 1.5263 if the Average Closing Price is equal to or greater than
$8.19 but less than $9.50;
(D) the quotient obtained by dividing (x) $14.50 by (y) the Average
Closing Price, if the Average Closing Price is equal to or greater
than $9.50 but less than $11.00; and
(E) 1.3182 if the Average Closing Price is equal to or greater than
$11.00.
The transaction is subject to approval by the shareholders of both
companies. The transaction is also subject to other customary closing
conditions, including expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act, and is expected to be completed in
early 1999. Shareholders representing approximately 17% of Lifeline's shares
have agreed to vote their shares in favor of the transaction and Westar Capital,
Inc., a subsidiary of Western Resources, Inc. and Protection One's parent and
holder of approximately 84% of Protection One's common stock, has similarly
agreed to vote in favor of the transaction. Lifeline has granted to Protection
One an option to purchase up to 19.9% of Lifeline's shares, exercisable under
certain circumstances.
BT Alex. Brown Incorporated served as financial advisor to Lifeline and
rendered a fairness opinion to Lifeline's Board of Directors in connection with
the transaction.
Statements contained in this press release concerning the Company's
outlook for Lifeline and other statements of management's beliefs, goals and
expectations are "forward-looking statements" as that term is defined in the
Private Securities Litigation Reform Act of 1995, and are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed in or implied by the statements. These risks and uncertainties include
the ability of the Company to complete the acquisition of Lifeline and integrate
the operations of Lifeline into Protection One's operations, as well as those
factors described in Protection One's registration statement on Form S-4 filed
with the Securities and Exchange Commission on September 22, 1998. Protection
One disclaims any obligation to update any forward-looking statements as a
result of developments occurring after the date of this press release.
Protection One, the second largest security alarm company in the United
States, provides monitoring and related security services to more than one
million residential and commercial subscribers across the nation.
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