The acquisition of Boca Raton-based security business ADT by private equity firm Apollo Global Management has been cleared to proceed by the Federal Trade Commission (FTC), according to a report by U.S.-based publishing company McClatchy.
The acquisition of Boca Raton-based security business ADT by private equity firm Apollo Global Management has been cleared to proceed by the Federal Trade Commission (FTC), according to a report by U.S.-based publishing company McClatchy.
The go-ahead, given on March 9 according to FTC's website, came after it was announced on February 16 that ADT, a security solutions provider for homes and businesses, has been acquired by Apollo, which will merge it with Protection 1, another home and commercial security company. The deal is worth nearly US$7 billion.
Apollo, which owns Protection 1 parent Prime Security Services Borrower LLC, will pay $42 per share of ADT, a premium of nearly 56 percent over ADT's $26.87 closing share price on Feb. 12.
According to the press release announcing the deal, the combined company will retain the ADT name and remain headquartered in Boca Raton, Florida. Timothy J. Whall, President and CEO of Protection 1, will be the CEO of the combined business following the closing of the transaction.
While ADT’s board approved the transaction, which is expected to be completed by June, there was a 40-day "go-shop" period in which ADT could look for a better deal than the one offered by Apollo. The FTC granted early termination of the required waiting period, McClatchy reported.
ADT shareholders have yet to vote on the acquisition, which is expected in late April, McClatchy quoted an ADT spokesman as saying.
The transaction represents one of the biggest leveraged buyouts in recent years, Wall Street Journal reported. ADT has more than $5 billion in debt, according to S&P Global Market Intelligence, and a so-called enterprise value of close to $10 billion.
A major objective of the merger is to leverage Protection 1’s success in the commercial market that ADT – formerly part of Tyco International – wants to make further inroads into.
Moving into the commercial sector has become quite urgent in the midst of more intense competition in the residential segment. According to USA Today, in the U.S., 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. At the same time, Google markets its own Nest Cam security camera and home networking products.
“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,” Whall said in the February 16 announcement.