Newspaper article International New York Times

Security Company Agrees to $6.9 Billion Buyout Deal

Newspaper article International New York Times

Security Company Agrees to $6.9 Billion Buyout Deal

Article excerpt

In the biggest leveraged buyout of the year so far, Apollo Global plans to merge the security company ADT with two other security firms.

The ADT Corporation, which provides home and business security systems for 6.5 million customers, is being acquired by the private equity firm Apollo Global Management for $6.9 billion in the largest leveraged buyout so far this year.

Apollo intends to merge ADT with Protection 1 and ASG Security, two other security companies that the firm agreed to purchase last May, although they will all operate under the ADT name. The combined company would create pro forma annual revenue surpassing $4.2 billion.

ADT traces its roots to Edward A. Calahan, the man who invented the stock ticker in 1867. When Mr. Calahan, the president of Calahan's Gold and Stock Telegraph Company, found a burglar in his home, he created a telegraph-based alert system. After more than a century of acquisitions and antitrust rulings, ADT was acquired by Tyco in 1997. Tyco decided to be broken up into three units in 2012, making ADT once again an independent company.

ADT was the last of Tyco's largest former subsidiaries to be acquired. The company first merged its flow-control unit with Pentair in 2012. In January, the security and fire-safety systems company that maintained the Tyco name decided to combine with Johnson Controls.

ADT agreed to be acquired by Apollo for $42 a share, or a 56 percent premium over ADT's closing price on Friday, according to a news release issued by the company on Tuesday.

An analyst at William Blair, a financial services firm, said one catalyst for the offer by Apollo was the drop in ADT's stock price after the company reported earnings for the first quarter of the 2016 fiscal year that showed a decline in free-cash flow before special items. On Tuesday, ADT's stock surged 47. …

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