Apollo Global to buy ADT for $7bn

Feb 16, 2016, 12:29 PM EST
Source: homesecuritysystems/flickr

Apollo Global agreed to buy electronic security services firm ADT for $7 billion.

Reuters reports:

Shares of ADT, a maker of burglary alarm systems, wireless cameras and video surveillance for homes and businesses, rose 52 percent to $41 in premarket trading on Tuesday, but were below the cash offer price of $42. After the transaction closes, ADT will be merged with Apollo's security services unit, Protection 1, in a deal valued at about $15 billion. The combined company, to be headquartered in Boca Raton in Florida, will have proforma annual revenue of more than $4.2 billion. Protection 1 Chief Executive Timothy Whall will head the combined company. The deal, expected to close by June, includes a "go-shop" period of 40 days, during which ADT can look for a better offer. ADT, spun off from fire safety and security systems maker Tyco International Plc (TYC.N) in 2012, had 166 million shares outstanding as of Dec. 31. Apollo bought Protection 1 in 2015.

The New York Times writes:

In a market that has been inhospitable to leveraged buyouts, the ADT deal is the largest in 2016. This month, in the other large private equity deal, Apollo Education agreed to be taken private for $1.1 billion by a consortium led by the Vistria Group that also included Apollo Global Management and Najaf Cos. Under the ADT deal, funds managed by Apollo and its co-investors will provide $4.5 billion for the transaction.The deal will also be financed by $1.6 billion through new first-lien loans and $3.1 billion in second-lien loans, as well as $750 million in preferred securities through the investment arm of Koch Industries, according to the statement. Barclays, Citigroup, Deutsche Bank and Royal Bank of Canada are providing the financing. The acquisition is expected to be completed by June, subject to shareholder approval and antitrust waiting periods.