The smart home market continues to heat up, and the legacy giants do not want to get locked out: quite literally. This morning, Assa Abloy, the $23 billion Swedish lock giant that owns Yale and many other brands — announced that it is buying US-based smart lock maker August Home to double down on new technology. 

Terms of the deal are not being disclosed but we have asked both August and Assa Abloy and will update this post as we learn more. Pending regulatory approvals, Assa Abloy says the acquisition will close in the fourth quarter of 2017.

Curiously, so far the only official note of the deal has come from Assa Abloy itself, not August, and it’s not clear whether co-founder and CEO Jason Johnson is joining as part of the deal. (The other co-founder is Yves Behar, the well-known product designer, and it’s not clear what role he will have, if any, either.)

“I am very pleased to welcome August into the ASSA ABLOY Group. August constitutes a strategic addition to the Group and reinforces our position in the residential smart door market,” Johan Molin, President and CEO of Assa Abloy, said in a statement.

“August Home strengthens our residential smart door strategy with complementary smart locks, expansion into video doorbells and comprehensive solutions for home delivery,” Thanasis Molokotos, its EVP and head of Americas added.

In an exchange with August earlier this morning, the company announced that it will continue to operate under its existing brand, albeit as part of Assa Abloy’s U.S. division. The news comes at a tumultuous time for Assa Abloy — it announced earlier this month that CEO Johan Molin is considering exiting the company next year, although he is still making prominent statements in support of the company’s acquisition strategy and future plans, as you can see here. 

Assa Abloy is the very definition of an old-guard giant that is now figuring out its steps in a new world very much being shaped by technology. The company has been in business in some form since 1881 (although the currently publicly traded company has been around since 1994). The company employs 47,000 people and has annual sales of about $8 billion.

August, in contrast, has been around since 2013 and has 90 employees. But it has become a market leader in the emerging connected security space, courtesy of its smart home locks and door bells.

The smart lock market is still a relatively nascent area. To put this deal into some context, August Home’s revenues for 2018 are expected to be $60 million, Assa Abloy noted today, or 0.75% of Assa Abloy’s entire current business. Future projections of the value of this market vary widely: one estimate puts it at $1.17 billion by 2023; another has boldly predicted it will be worth $24 billion by 2024.

August had raised around $75 million in venture funding, with the most recent round closing only in July of this year. Investors were a long list that included strategics like Japan’s KDDI and Qualcomm, as well as Maveron, Bessemer, Rho, Cowboy Ventures and a number of individual investors.

August has been growing fairly quickly on its own in recent years, courtesy of distribution deals with mega-retailers in the U.S. like Best Buy. Back in July, the hardware startup raised a $25 million series C, with plans to beef of August Access, the company’s partner platform. Late last month, it also found a partner in mega-retailer Wal-mart, which announced its intentions to use the company’s connected locks as part of its delivery services. Among other things, this deal should increase August’s international presence.

We will update this post as we learn more.

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