Timothy J. Whall
ADT, a provider of security and automation solutions for homes and businesses in North America, announced the acquisition close of DATASHIELD, one of the country’s fastest growing cybersecurity companies. Now operating under the brand ADT Cybersecurity, this service is uniquely positioned to provide Enterprise and Mid-Market businesses with Managed Detection and Response (MDR) services to combat advanced cyberthreats in real-time. DATASHIELD CEO Michael Malone will join the ADT team as Senior Vice President, ADT Cybersecurity, reporting directly to Timothy J. Whall, CEO, ADT. The security gap is widening as advanced threats continue to bypass the first line of defense, and many organizations are struggling to deploy, manage and use an effective combination of expertise and tools to detect advanced cyberthreats. Mid-Market and Enterprise organizations are increasingly finding the need for 24x7 managed and monitored cyber solutions to help detect and respond to cyberattacks. It is estimated that by 2020, approximately 20 percent of Mid-Market and Enterprise organizations will be using MDR services such as ADT Cybersecurity, up from less than 1 percent in 2016. SHIELDVision Cyber Intelligence Solution DATASHIELD, now ADT Cybersecurity, is the only MDR provider to offer full packet capture and inspection beyond headers and metadata behind the firewall. ADT Commercial and National Account customers who look to add ADT Cybersecurity services will also have access to SHIELDVision, a unified platform for organizing, managing, & collecting cyber intelligence. SHIELDVision automates security analyst workflows to close the gap between cyberattack and breach detection time and remediation for customers. "Our goal is to provideADT customers with themost comprehensivesecurity solution toprotect their business" Data breaches caused by cyberattacks on networks are plaguing businesses of all sizes. This year could set another record for the number and severity of data breaches after record years in 2015 and 2016. The median time of compromise to discovery is a staggering 80 days with the average cost of data breach costing organizations $3.62 million. Physical And Digital Security Solution “Our goal is to provide ADT customers with the most comprehensive security solution to protect their business, and in today’s world, this not only means their physical premise, but also their network,” said ADT’s Whall. “For more than 143 years, ADT has been monitoring physical properties, and DATASHIELD will now allow us to extend that same level of security monitoring to the digital world. Michael and his team will infuse cybersecurity DNA into our core business, allowing us to provide an offering that will distinguish our brand as the premiere resource for end-to-end security.” “The standard approach to cybersecurity was not designed to provide rapid response,” said Michael Malone, CEO, DATASHIELD. “This is a landmark opportunity to combine the brand and reach of ADT, with the technology and innovation of DATASHIELD to establish the new standard in the most comprehensive digital protection for Mid-Market and Enterprise businesses.” Advanced Security Operations Center Headquartered in Scottsdale, AZ, DATASHIELD was founded in 2009 and has quickly become the leader in Managed Detection and Response for the Mid-Market and Enterprise. In September, DATASHIELD opened its state-of-the-art Advanced Security Operations Center (ASOC), increasing customer capacity by 300 percent. ADT Cybersecurity services are available for Commercial and National Account customers effective immediately. Momentum Partners acted as exclusive financial advisor to DATASHIELD and is serving as ADT’s strategic cybersecurity advisor.
2016 is shaping up to be the year of the billion-dollar merger in the security market. After last month's mammoth Tyco/Johnson Control merger, a second big merger has rocked the market, this one involving one of the most familiar names in the consumer market – ADT. The home and small business security company, which traces its history back to 1874, has agreed to be acquired by private equity firm Apollo Global Management, and will merge with competitor Protection 1, a subsidiary of Apollo-owned Prime Security Services Borrower LLC. Smart technology integration It’s the second time in a month that a company “formerly known as Tyco” has been involved in a multi-billion-dollar merger. On January 25th, Tyco announced an agreement to merge with Johnson Controls (and to abandon the Tyco name). ADT was part of Tyco before being spun off as a separate company in 2011. The new combined company will retain the familiar ADT brand and remain headquartered in Boca Raton, Florida. Read more: Tyco and Johnson Controls merger driven by convergence The announcement comes amid rapid changes in the residential security and home automation market, much of it driven by emerging Internet of Things (IoT) technology. Holding the largest share of the U.S. residential security market, and a respectable small business presence, ADT has been aggressively promoting its leadership role in home automation with its ADT Pulse product. At the Consumer Electronics Show in 2016, ADT announced integration of several “smart” technologies, including the Nest Learning Thermostats, with Pulse. ADT is creating a home automation ecosystem through strategic partnerships with various technology companies using its application programming interfaces (APIs) to achieve best-in-class smart home automation. Adding Protection 1 customers to the mix will expand those opportunities. Protection 1 began in 1991 when it was spun off from PacifiCorp., a power utility. It grew rapidly, largely through acquisition, into a full-service business and home security company, although growth came with financial challenges along with way. Protection 1 and ASG Security were acquired by Prime Security Services Borrower last year. Currently, Protection 1 operates five security monitoring centers and serves more than 2 million customers. Entering commercial security sector Recently, Protection 1 has made strides in the retail and enterprise markets, including promoting electronic security technologies that can help companies comply with ever-increasing regulations and guidelines that govern their industries. The enterprise business is a nice complement to ADT, which has focused on smaller businesses (and residential) since ceding its enterprise business to Tyco in the 2011 spin-off agreement (the non-compete expired in 2014). “Protection 1’s robust commercial presence will speed ADT’s expansion into the commercial sector,” says Timothy J. Whall, Protection 1’s President and CEO. The acquisition is by no means a “done deal,” however. The agreement includes a 40-day "go-shop" period in which ADT could look for a better offer. Jeff Kessler of Imperial Capital contends that ADT's shares are undervalued on the market, and should be higher than $26.87. "Despite the 56% premium Apollo is paying for ADT (based on the closing price on Feb. 12, 2016), the valuation is not high, and we believe it could allow room for a possible strategic bid, even in the current challenging market," he says.
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.
SNGTM takes a broad look the latest research, and commercial and industrial market trends in the security industry The Security Industry Association (SIA) has announced the agenda for Securing New Ground® (SNGTM), the security industry’s top executive conference, scheduled for Oct. 28-29, 2015, at the Millennium Broadway Hotel in New York City. The SNGTM 2015 This executive forum takes a comprehensive look at the state of the security industry, the latest research, and commercial and industrial market trends impacting business strategies. Over a day-and-a-half of sessions tailored for suppliers, integrators and practitioners, conferees will experience a focused, unbiased event where game-changing information is exchanged, and business gets done. “In the last several years of SNGTM, we have mapped incredible change in the security industry to the benefit of our members and conferees,” said V. John Stroia, Chief Operating Officer of The Will-Burt Company and SIA Chairman. “I’ve seen firsthand how businesses have been bought and sold and lucrative new deals have been made because of contacts initiated at the SNGTM conference. It is the best place for security industry executives to make things happen.” Some of the top presenters confirmed to date include influential suppliers, integrators and practitioners in the security industry: Suppliers Steven Van Till, President & CEO, Brivo Systems Thanasis Molokotos, President & CEO, ASSA ABLOY Americas Division Ron Virden, President & General Manager, Lenel, Supra and Onity Integrators And Dealers Tim Whall, Chairman & CEO, Protection 1 Jason Oakley, President, North American Video, Inc. Pamela Petrow, President & CEO, Vector Security Inc. Practitioners Bonnie Michelman, Director of Police, Security and Outside Services, Massachusetts General Hospital Brian Allen, Chief Security Officer, Time Warner Dave Cullinane, Founder, TruSTAR Technology LLC New SNGTM Opportunities For the first time, SIA is teaming up with the Global Security Risk Management Alliance (GSRMA) to expand SNGTM opportunities for security practitioners. A half-day practitioners’ session will provide a plain English translation of IT security concepts and actions so any physical security leader can effectively engage in a discussion of cyber security. “As cofounder and president of GSRMA, I have alerted my fellow security practitioners to beware of the blurring distinctions between traditional and logical security. As we work toward an umbrella Enterprise Security Risk Management framework, SNGTM is an excellent venue for practitioners to identify the challenges of a unified security alignment side-by-side with suppliers and security integrators,” said Ray O'Hara, CPP, Executive Vice President of AS Solution. The security sector is evolving at a rapid pace, and SNGTM is essential to properly evaluate new partnerships and key factors that will influence the decisions and investments visitors make in the future.
The projects ranged from serving meals at rescue missions to blood, food and clothing drives Protection 1, the largest full-service business and home security company in the U.S., recently announced that it has just completed its third annual “All for 1 Day” where its employees volunteered their time for local causes that will benefit the communities where they live and work. During this year’s event, team members from 70 branches across the country donated more than 1,000 hours in support of a wide range of projects benefiting more than 30 organizations and communities. The projects ranged from serving meals at rescue missions, senior centers and local Ronald McDonald’s houses to blood, food and clothing drives and community clean-up projects. Team Building “For the past three years, our employees have enthusiastically participated in “All for 1 Day” spending their time giving back to the communities where they live,” said Timothy J. Whall, Chairman and CEO of Protection 1. “This year we saw quite a bit of activity supporting children’s causes. Efforts such as “All for 1 Day” personify our core company values and priorities and we firmly believe that not only do we make a difference in providing safety and security measures to our customers, but we make our communities a better place to live.” Protection 1’s “All for 1 Day” gives its employees the latitude to choose projects that will make the greatest impact in their areas. Team members from Dallas, Texas took the day to paint rooms at Camp Summit, a premier camp that provides a barrier-free environment for adults and children with disabilities. Team members in Birmingham spent the day cleaning up Jessie’s Place, a women and children’s shelter in that city. In Los Angeles, a food, clothing and essentials drive was held in support of Children of the Night while the Topeka/Lawrence, KS branches held a car wash to raise money for Helping Hands, another not-for-profit that supports families with disabled children. “All for 1 Day” also gives Protection 1 associates a vehicle to work together outside of their office environments and is a great avenue for fostering team building and an enormous sense of pride.
Joining forces with Protection 1 will extend CCI’s reach to better serve its customer base Protection 1, the largest full-service business and home security company in the U.S., recently announced that it has completed the acquisition of Cam Connections, Inc. (CCI), a full service security systems integrator based in Lakeland, Florida with satellite offices in Davie, Florida and Charlotte, North Carolina. The company specializes in providing tailored security solutions to meet its customers’ specific needs. Increasing Customer Base This acquisition follows the recent announcement that Apollo Global Management has signed definite agreements to acquire both Protection 1 and ASG Security. Under this new arrangement, Protection 1 will serve as the platform on which Apollo will enter the security market and CCI will further complement the company’s offerings. “We have always looked for strategic acquisitions that can broader or deepen key areas of expertise. We are excited to have CCI join the Protection 1 team. Between our national footprint and their expertise, we will be able to offer more solutions to our combined customers and prospects and build on our strong foundation,” said Timothy J. Whall, Chairman and CEO for Protection 1. “Cam Connections’ business model is based on the same philosophy as Protection 1’s - providing the latest in electronic security solutions to its customers while delivering the highest level of customer service - making them an ideal fit for our organization.” Joining forces with Protection 1 will extend CCI’s reach to better serve its customer base by leveraging Protection 1’s national footprint. The two companies offer similar technologies including intrusion and life safety systems, access control, CCTV, video analytics and POS monitoring. Founded in 1998, CCI currently employs nearly 60 individuals primarily focused on sales, service and installation of electronic security systems. Their current President and CEO, Robert Bull, will remain with Protection 1 as Vice President-CCI, a division of Protection 1. “This is going to be an amazing partnership,” comments Bull. “Cam Connections has been known as one of the most innovative integration companies in the industry for several years while Protection 1 is an absolute powerhouse when it comes to electronic security solutions. We are going to do great things together.”
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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