What: Shares of home security services specialist ADT Corp. (NYSE: ADT) were up a whopping 49.5% at 11 a.m. ET Tuesday after agreeing to be purchased by investment manager Apollo Global Management, LLC (APO) for about $6.94 billion.
So what: The all-cash deal -- one of the largest leveraged buyouts in recent years -- values ADT at $42 per share and represents a 56% premium to its closing price this past Friday. Apollo said it will merge its Protection 1 subsidiary with ADT in order to strengthen its position in the alarm services space, and judging by Apollo's own 3% gain today, Mr. Market seems pleased with the price that management is paying to do it.
Now what: The deal, which is expected to close by June, will create a combined company expected to generate $318 million in recurring monthly revenue and total annual revenue of more than $4.2 billion. "The combined company will be a market leader with a powerful brand and scale resulting in an enhanced overall customer experience," said Protection 1 President and CEO Timothy Whall, who will be tapped as CEO of the combined business. "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." So while ADT is likely all popped at this point, Apollo's newly bolstered scale and competitive strength might be worth looking into.
