US private equity firm Apollo today said it is taking security equipment firm ADT private and merging it with another security company in a deal valued at $15bn (£10.5bn).
Apollo said it will pay $42 per share for ADT, representing a premium of around 56 per cent over ADT's closing share price on 12 February 2016.
“This transaction provides the opportunity to dramatically enhance our position in the large, fragmented and growing residential and business interactive electronic monitoring industry,” said Marc Becker, senior partner at Apollo.
“The newly created company will generate a combined $318m in recurring monthly revenue and total annual revenue in excess of $4.2bn.”
ADT, which manufactures burglar alarms and CCTV cameras for homes and small businesses, has been listed on the New York Stock Exchange since 2012, when it was spun out of US conglomerate Tyco.
Protection 1 is a security firm that Apollo bought last year for $1.5bn.
Apollo said that the deal would be financed by $4.5bn from its buyout funds and co-investors, alongside a range of loans and the redemption of some of ADT's bonds.
The headquarters of the combined company will remain in Boca Raton, Florida, where ADT currently resides, and will operate primarily under the ADT brand.
“This transaction represents a highly attractive premium for ADT’s shareholders,” said Naren Gursahaney, president and chief executive of ADT.
“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.”
“The combined company will be a market leader with a powerful brand and scale resulting in an enhanced overall customer experience,” said Timothy J. Whall, president and chief executive of Protection 1, who will be the chief executive of the combined business following the closing of the transaction.
“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.”