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 ADT, a leading provider of monitored security, interactive home and business automation and related monitoring services in the United States and Canada, 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, Florida, and the combined company will operate primarily under the ADT brand. Expand ADT Services And Customers With Protection 1’s Commercial Presence “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.” "This transaction represents a highly attractive premium for ADT’s shareholders" says Naren Gursahaney, President and CEO of ADT “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.” Unanimous Approval From Board Of Directors 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. Financial Details 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. "The combined company will be a market leader with a powerful brand and scale resulting in an enhanced overall customer experience" says Timothy J. Whall, President and CEO of Protection 1 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.
The newly created company enables Apollo to generate $500 million annual revenue Protection 1, a leading full-service business and home security company in the United States, recently announced it has signed definitive agreements to be acquired by funds managed by affiliates of Apollo Global Management, LLC (together with its consolidated subsidiaries, “Apollo”). By partnering with Apollo, one of the world’s largest alternative investment managers, Protection 1 is now even better positioned to command a greater share of the $46 billion security monitoring industry through organic growth and strategic acquisitions, both of which have been core to the company’s solid growth over the past five years. Apollo To Enter The Security Monitoring Industry Funds managed by affiliates of Apollo also announced recently the concurrent signing of definitive agreements to acquire Maryland-based ASG Security, which will be combined with Protection 1. The newly created company, which will continue to operate under the Protection 1 brand, enables Apollo to enter the security monitoring industry with a market leader generating a combined $40 million in monthly recurring revenue and total annual revenue well in excess of $500 million. Terms of the transactions, which are expected to close in mid-2015, were not disclosed. Protection 1 and ASG Security will join forces under the leadership of Protection 1’s Chairman and Chief Executive Officer Timothy J. Whall. “Apollo is universally respected for recognizing investment opportunities where it can take a lead position and then work collaboratively with the management teams to achieve the greatest potential for the business. With Apollo’s style of investing, as well as their access to capital, we know this relationship is a great match for Protection 1,” said Whall. “At the same time, Protection 1 is coming together with ASG Security, which immediately strengthens our market leading position and creates additional breadth and depth in our operations. ASG has a strong reputation for operational excellence and together our companies will continue to focus on the outstanding customer service for which we are both known.” Residential And Commercial Security Monitoring “Apollo is delighted to be partnering with Tim Whall and his team to combine two strong businesses and create the industry leading platform in both residential and commercial security monitoring,” said Marc Becker, Senior Partner at Apollo. “Protection 1 is one of the strongest companies in the industry, with a national footprint, diverse sales channels and an experienced management team with a history of delivering strong financial results while being laser-focused on customer service. We see further opportunity for growth in the industry, and with the greater scale of a combined Protection 1 with ASG, the new company is well-positioned to succeed in a business that we believe offers very compelling expansion and value-creation opportunities.” “As Apollo enters the security space, ASG Security is excited to be a part of creating a new platform that is well-positioned to become a significant leader in the industry,” said Joe Nuccio, President and CEO of ASG Security. “ASG’s reputation, coupled with our financial and operational strength, will play an important role in the overall company expansion and value-creation opportunities.” Financing is being provided by Credit Suisse, Barclays, Deutsche Bank, Jefferies and RBC. Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal adviser to Apollo; Latham & Watkins LLP is acting as legal adviser to Protection 1; and Kirkland & Ellis LLP is acting as legal adviser to ASG Security. Morgan Stanley and Raymond James are acting as financial advisors to Protection 1 and Goldman Sachs is acting as financial advisor to ASG Security.
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