Shares of ADT (ADT 4.69%) soared on Monday after the provider of security and smart home solutions disclosed a new partnership with Alphabet's (GOOG 3.09%) (GOOGL 2.84%) Google. As of 1:20 p.m. EDT, ADT's stock was up 57% after having spiked by as much as 99% earlier in the day.
ADT said it would work with Google to "create the next generation of smart home security offerings." The deal will link its leading professional monitoring network and installation services with Google's AI-powered Nest line of connected home products.
"We are thrilled to partner with Google to provide the smart home market with a strong, differentiated product and service offering that integrates the best technology, hardware, and smart home security expertise from our two brands," CEO Jim DeVries said in a press release.
Under the terms of the agreement, Google will invest $450 million in exchange for a 6.6% stake in ADT. Each company will contribute an additional $150 million for product development and marketing purposes. "Google's partnership and financial investment in ADT underscore the depth of our joint commitment to the smart home and security markets," DeVries said.
The deal has the potential to alter the competitive landscape in the home security and smart-home markets. Intensifying competition from do-it-yourself rivals like SimpliSafe and Ring, which was acquired by Amazon (AMZN 4.47%) in 2018, has taken a toll on ADT in recent years. This partnership with Google could help ADT take back market share from these formidable competitors.
The partnership will also help to advance Google's connected home ambitions. Google remains in a distant second place behind Amazon for smart home market share, with Amazon controlling roughly 70% compared to Google's 25%. "We're excited to partner with ADT to further our mission of building helpful devices for the home," Nest General Manager Rishi Chandra said.