In a deal that values the home-security company ADT Corp. at about $6.93 billion, private-equity firm Apollo Global Management LLC is to buy the company.
The deal was not affected despite the latest signmarket volatility.
Representing a 56% premium over Friday’s closing price represented by the all-cash price tag of $42 a share, the firms are reportedly in talks and a deal could be reported very soon, reported The Wall Street Journal.
Apollo’s Protection 1 subsidiary would be the parent company into which ADT will fold into. Protection 1 is an ADT competitor that Apollo had bought last year in a move to venture into the alarm monitoring services industry.
“Protection 1’s robust commercial presence will speed ADT’s expansion into the commercial sector,” said Timothy Whall, Chief Executive of Protection 1. The new combined business formed by the deal expected to be closed by June this year would be led by Whall.
Security products for residential customers and businesses, ranging from burglary alarm systems to wireless cameras and video surveillance is manufactured by ADT which is an offshoot of the former Tyco conglomerate.
The target of the company is the so-called smart-home market, which aims to connect consumers wirelessly to various household devices and the company wants to position itself as an important player in this segment. In part as a result of a broader downturn sparked by fears of slowing economic growth, among other factors, the company’s stock is down 30% in the past year.
One of the biggest leveraged buyouts in recent years is represented by the transaction. With a so-called enterprise value of close to $10 billion according to S&P Global Market Intelligence, ADT has more than $5 billion in debt.
Veterans of junk-bond pioneer Drexel Burnham Lambert was the founder of Apollo which is based in New York. Aggressive, sometimes contrarian, bets are made by the firm. As many rivals have sat on the sidelines of the LBO market, the firm has been acquisitive as of late. A deal to buy struggling education company Apollo Education Group Inc., with which it is unaffiliated, was signed by the company for around $1.1 billion earlier this month.
The fact that the market volatility hasn’t derailed the merger market is exhibited by this deal. The deal activity so far in 2016 has been surprisingly robust despite choppy equity, debt and other markets this year. This compared to the record activity notched in 2015 when companies struck nearly $5 trillion of mergers.
China National Chemical Corp.’s $34 billion deal for agriculture-products provider Syngenta AG and Shire PLC’s $32 billion planned purchase of Baxalta Inc were among the other important tie-ups this year.
Total annual sales of at least $4.2 billion and a monthly revenue of $318 million would be generated by the new combined company – the companies said. ADT posted $3.57 billion in revenue, up 4.9% from the previous year in its most recent fiscal year
The deal would be financed by Apollo through $4.7 billion in new debt and the issuance of $750 million in preferred securities.
A “go-shop” period, during which ADT may actively solicit and consider alternative proposals is included in the merger agreement.
The role of financial advisers to Protection 1 is being played by Barclays, Citigroup Global Markets, Deutsche Bank and RBC Capital Markets. While the lead financial adviser to ADT is Goldman Sachs, the role of financial advisor to ADT will be played by BofA Merrill Lynch.
(Source:www.wsj.com)
The deal was not affected despite the latest signmarket volatility.
Representing a 56% premium over Friday’s closing price represented by the all-cash price tag of $42 a share, the firms are reportedly in talks and a deal could be reported very soon, reported The Wall Street Journal.
Apollo’s Protection 1 subsidiary would be the parent company into which ADT will fold into. Protection 1 is an ADT competitor that Apollo had bought last year in a move to venture into the alarm monitoring services industry.
“Protection 1’s robust commercial presence will speed ADT’s expansion into the commercial sector,” said Timothy Whall, Chief Executive of Protection 1. The new combined business formed by the deal expected to be closed by June this year would be led by Whall.
Security products for residential customers and businesses, ranging from burglary alarm systems to wireless cameras and video surveillance is manufactured by ADT which is an offshoot of the former Tyco conglomerate.
The target of the company is the so-called smart-home market, which aims to connect consumers wirelessly to various household devices and the company wants to position itself as an important player in this segment. In part as a result of a broader downturn sparked by fears of slowing economic growth, among other factors, the company’s stock is down 30% in the past year.
One of the biggest leveraged buyouts in recent years is represented by the transaction. With a so-called enterprise value of close to $10 billion according to S&P Global Market Intelligence, ADT has more than $5 billion in debt.
Veterans of junk-bond pioneer Drexel Burnham Lambert was the founder of Apollo which is based in New York. Aggressive, sometimes contrarian, bets are made by the firm. As many rivals have sat on the sidelines of the LBO market, the firm has been acquisitive as of late. A deal to buy struggling education company Apollo Education Group Inc., with which it is unaffiliated, was signed by the company for around $1.1 billion earlier this month.
The fact that the market volatility hasn’t derailed the merger market is exhibited by this deal. The deal activity so far in 2016 has been surprisingly robust despite choppy equity, debt and other markets this year. This compared to the record activity notched in 2015 when companies struck nearly $5 trillion of mergers.
China National Chemical Corp.’s $34 billion deal for agriculture-products provider Syngenta AG and Shire PLC’s $32 billion planned purchase of Baxalta Inc were among the other important tie-ups this year.
Total annual sales of at least $4.2 billion and a monthly revenue of $318 million would be generated by the new combined company – the companies said. ADT posted $3.57 billion in revenue, up 4.9% from the previous year in its most recent fiscal year
The deal would be financed by Apollo through $4.7 billion in new debt and the issuance of $750 million in preferred securities.
A “go-shop” period, during which ADT may actively solicit and consider alternative proposals is included in the merger agreement.
The role of financial advisers to Protection 1 is being played by Barclays, Citigroup Global Markets, Deutsche Bank and RBC Capital Markets. While the lead financial adviser to ADT is Goldman Sachs, the role of financial advisor to ADT will be played by BofA Merrill Lynch.
(Source:www.wsj.com)
