ADT, the home and business security systems provider, is being acquired by the private equity firm Apollo Global Management for 6.9 billion dollars, that is $42 per share, in the largest leveraged buyout so far this year.
ADT currently has 6.5 million customers and Apollo intends to merge them with Protection 1 and ASG Security, two other security companies that the will all operate largely under the ADT name. The NY Times estimates that the combined company will create an annual revenue in excess of $4.2 billion.
ADT was acquired by TYCO in 1997 but in 2012 Tyco decided to break into three units in 2012, giving ADT its independence once again.
ADT was the last of Tyco’s largest former subsidiaries to be acquired. The company first merged its flow-control unit with Pentair in 2012. In January, the security and fire-safety systems company that maintained the Tyco name decided to combine with Johnson Controls.
According to an ADT press release the purchase price represents a premium of approximately 56 percent over ADT’s closing share price on February 12, 2016 and, when combined with Protection 1, represents an aggregate transaction value of approximately $15 billion.
Naren Gursahaney, President and CEO of ADT said:
“This transaction represents a highly attractive premium for ADT’s shareholders.”
“We’re proud to have strengthened the quality of our customer base, improved service and retention, and extended our leadership in innovative solutions such as our ADT Pulse platform and our new Security-as-a-Service offering, ADT Canopy. By combining Protection 1 with ADT, we will be better positioned to expand the breadth and depth of the services we offer to our customers throughout the United States and Canada.”
Timothy J. Whall, President and CEO of Protection 1, who will be the CEO of the combined business following the closing of the transaction said:
“The combined company will be a market leader with a powerful brand and scale resulting in an enhanced overall customer experience.”
“In addition, Protection 1’s robust commercial presence will speed ADT’s expansion into the commercial sector supported by increasing commercial sales and technical skills across a well matched national footprint.”
Marc Becker, Senior Partner at Apollo said:
“We are tremendously excited by this unique opportunity to combine two premier businesses. This transaction provides the opportunity to dramatically enhance our position in the large, fragmented and growing residential and business interactive electronic monitoring industry. Pro forma for the transaction, the newly created company will generate a combined $318 million in recurring monthly revenue and total annual revenue in excess of $4.2 billion, placing the businesses in a strong position to drive innovation and to capitalize on growth opportunities in the future.”
The Board of Directors of ADT unanimously approved the transaction. The acquisition of ADT is expected to be completed by June 2016. The transaction is subject to the conclusion of the applicable antitrust waiting periods in the United States and Canada, ADT stockholder approval and other customary closing conditions.