ADT to Be Acquired by Apollo for $6.9B

Apollo will combine ADT with Protection 1, a competitor in home security it acquired last May.
Matthew HellerFebruary 16, 2016

Home and business security companies ADT and Protection 1 are combining through a $6.9 billion leveraged buyout of ADT by private equity firm Apollo Global Management.

The deal values ADT at $42 per share, a premium of approximately 56% over the closing share price on Friday. The stock was up more than 47%, at $39.65, in trading Tuesday.

Apollo intends to merge ADT with Protection 1, a competitor of ADT that it acquired in May, and the combined company is expected to generate more than $4.2 billion in annual revenue. The deal is the largest leveraged buyout so far this year.

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“The combined company will be a market leader with a powerful brand and scale resulting in an enhanced overall customer experience,” Timothy J. Whall, chief executive of Protection 1, said in a news release. “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.”

As USA Today reports, ADT and Protection One are combining amid increased competition in the home security market, which is forecast to grow globally from $31.4 billion last year to $47.5 billion in 2020.

“In the U.S., which accounts for about 60% of the market, traditional players such as ADT and Honeywell have seen the arrival of fairly recent entrants such as AT&T, Comcast, Time Warner Cable, and Verizon — and Google, which markets its own Nest Cam security camera and home networking products,” USA Today said.

ADT, an offshoot of the former Tyco conglomerate, makes security products for residential customers and businesses, ranging from burglary alarm systems to wireless cameras and video surveillance. “It has worked to position itself as a player in the so-called smart-home market, which aims to connect consumers wirelessly to various household devices,” the Wall Street Journal said.

The merger agreement includes a 40-day “go-shop” period, during which ADT may look for a better deal.

“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,” ADT CEO Naren Gursahaney said.