Protection 1 and ADT Merge Via Apollo Global Management

Transaction Delivers Significant Value to The ADT Corporation Stockholders and Provides Path for Future Growth of the Businesses Through the Combination of ADT and Protection 1

The ADT Corporation today announced that it has entered into a definitive agreement to be acquired by an affiliate of certain funds (the “Apollo Funds”) managed by affiliates of Apollo Global Management, LLC (NYSE:APO) (together with its consolidated subsidiaries, “Apollo”) and co-investors and merged with a subsidiary of Prime Security Services Borrower, LLC (with its subsidiaries, “Protection 1”), a leading full-service business and home security company in the United States also owned by the Apollo Funds, for $42.00 per share in cash. The purchase price represents a premium of approximately 56% over ADT’s closing share price on February 12, 2016 and, when combined with Protection 1, represents an aggregate transaction value of approximately $15 billion. The headquarters of the combined company will remain in Boca Raton, FL, and the combined company will operate primarily under the ADT brand.

“This transaction represents a highly attractive premium for ADT’s shareholders,” said Naren Gursahaney, President and CEO of ADT.  “We’re proud to have strengthened the quality of our customer base, improved service and retention, and extended our leadership in innovative solutions such as our ADT Pulse platform and our new Security-as-a-Service offering, ADT Canopy. 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 CEO of Protection 1, who will be the CEO 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.”

“We are tremendously excited by this unique opportunity to combine two premier businesses,” said Marc Becker, Senior Partner at Apollo. “This transaction provides the opportunity to dramatically enhance our position in the large, fragmented and growing residential and business interactive electronic monitoring industry.  Pro forma for the transaction, the newly created company will generate a combined $318 million in recurring monthly revenue and total annual revenue in excess of $4.2 billion, placing the businesses in a strong position to drive innovation and to capitalize on growth opportunities in the future.” 

The Board of Directors of ADT unanimously approved the transaction. The acquisition of ADT is expected to be completed by June 2016. The transaction is subject to the conclusion of the applicable antitrust waiting periods in the United States and Canada, ADT stockholder approval and other customary closing conditions.

The merger agreement includes a “go-shop” period, during which ADT and its Board of Directors may actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals during a 40-day period following the execution date of the definitive agreement. There can be no assurance that this process will result in a superior proposal. ADT does not intend to disclose developments about this process unless and until its Board has made a decision with respect to any potential superior proposal.

The transaction, which has fully committed financing in place, will be financed primarily through the incurrence of $1.555 billion in new first lien term loans, $3.140 billion in new second lien financing, the issuance of $750 million of preferred securities to an affiliate of Koch Equity Development LLC, the investment and acquisition subsidiary of Koch Industries, Inc., and an equity contribution of approximately $4.5 billion from funds managed by Apollo and co-investors.  Protection 1 will also enter into a new $255 million first lien revolving facility concurrently with the closing of the merger, bringing the total combined senior secured revolving facility to $350 million.  Protection 1 further expects that its existing $1,095 million first lien term loan and $260 million second lien term loan will remain outstanding. In addition, concurrently with the closing of the merger, Protection 1 intends to redeem all of ADT’s outstanding senior unsecured 2.250% notes due July 2017 and senior unsecured 4.125% notes due April 2019, which will be redeemed in accordance with the applicable indenture, and to repay all outstanding borrowings under ADT’s revolving credit facility.  Finally, ADT’s remaining $3.750 billion of total senior unsecured notes will be guaranteed by Protection 1 and all wholly owned domestic subsidiaries of the combined company and will be secured by first priority security interests in substantially all of the assets of the issuer and the guarantors.  As a result, Protection 1 expects that these notes will maintain their current ratings and remain outstanding.

Financing is being provided by Barclays, Citigroup Global Markets Inc., Deutsche Bank and Royal Bank of Canada.  PSP Investments Credit USA LLC is also a committed lender under this debt financing.  Goldman, Sachs is serving as lead financial advisor to ADT and BofA Merrill Lynch is also serving as financial advisor to ADT.  Barclays, Citigroup Global Markets Inc., Deutsche Bank, and RBC Capital Markets, LLC are serving as financial advisors to Protection 1. Simpson Thacher & Bartlett LLP is acting as legal advisor to ADT. Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal advisor to Protection 1 and Apollo.

Featured

  • Survey: 54% of Organizations Cite Technical Debt as Top Hurdle to Identity System Modernization

    Modernizing identity systems is proving difficult for organizations due to two key challenges: decades of accumulated Identity and Access Management (IAM) technical debt and the complexity of managing access across multiple identity providers (IDPs). These findings come from the new Strata Identity-commissioned report, State of Multi-Cloud Identity: Insights and Trends for 2025. The report, based on survey data from the Cloud Security Alliance (CSA), highlights trends and challenges in securing cloud environments. The CSA is the world’s leading organization dedicated to defining standards, certifications, and best practices to help ensure a secure cloud computing environment. Read Now

  • Study: Only 35 Percent of Companies Include Cybersecurity Teams When Implementing AI

    Only 35 percent of cybersecurity professionals or teams are involved in the development of policy governing the use of AI technology in their enterprise, and nearly half (45 percent) report no involvement in the development, onboarding, or implementation of AI solutions, according to the recently released 2024 State of Cybersecurity survey report from ISACA, a global professional association advancing trust in technology. Read Now

  • New Report Series Highlights E-Commerce Threats, Fraud Against Retailers

    Trustwave, a cybersecurity and managed security services provider, recently released a series of reports detailing the threats facing the retail sector, marking the second year of its ongoing research into these critical security issues. Read Now

  • Stay Secure in 2024: Updated Cybersecurity Tips for the Office and at Home

    Cyber criminals get more inventive every year. Cybersecurity threats continue to evolve and are a moving target for business owners in 2024. Companies large and small need to employ cybersecurity best practices throughout their organization. That includes security integrators, manufacturers, and end users. Read Now

Featured Cybersecurity

Webinars

New Products

  • Camden CM-221 Series Switches

    Camden CM-221 Series Switches

    Camden Door Controls is pleased to announce that, in response to soaring customer demand, it has expanded its range of ValueWave™ no-touch switches to include a narrow (slimline) version with manual override. This override button is designed to provide additional assurance that the request to exit switch will open a door, even if the no-touch sensor fails to operate. This new slimline switch also features a heavy gauge stainless steel faceplate, a red/green illuminated light ring, and is IP65 rated, making it ideal for indoor or outdoor use as part of an automatic door or access control system. ValueWave™ no-touch switches are designed for easy installation and trouble-free service in high traffic applications. In addition to this narrow version, the CM-221 & CM-222 Series switches are available in a range of other models with single and double gang heavy-gauge stainless steel faceplates and include illuminated light rings. 3

  • 4K Video Decoder

    3xLOGIC’s VH-DECODER-4K is perfect for use in organizations of all sizes in diverse vertical sectors such as retail, leisure and hospitality, education and commercial premises. 3

  • Camden CV-7600 High Security Card Readers

    Camden CV-7600 High Security Card Readers

    Camden Door Controls has relaunched its CV-7600 card readers in response to growing market demand for a more secure alternative to standard proximity credentials that can be easily cloned. CV-7600 readers support MIFARE DESFire EV1 & EV2 encryption technology credentials, making them virtually clone-proof and highly secure. 3