ADT rockets on Apollo Global buyout deal

Monitored security provider ADT rocketed in pre-market trade after agreeing to be bought by private equity firm Apollo Global Management for $42 a share in cash, or around $6.9bn.

The purchase price represents a premium of around 56% to ADT’s closing price on 12 February.

As part of the process, ADT will be combined with Protection 1, a competitor acquired by Apollo last year as it looked to move into the alarm monitoring services industry.

ADT said that when combined with Protection 1, the price represents an aggregate transaction value of approximately $15bn.

“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 officer of Protection 1, who will be the CEO of the combined business once the deal closes.

“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.”

Apollo said the newly-created company will generate a combined $318m in recurring monthly revenue and total annual sales in excess of $4.2bn.

The merger agreement, which is expected to be completed by June, includes a “go-shop” period during which ADT may actively solicit and consider alternative proposals .

Apollo said it will finance the deal through $4.7bn in new debt and the issuance of $750m in preferred securities.

At 1236 GMT, ADT shares were up 52.5% to $40.97 in pre-market trade.