Google to Invest $450 Million in ADT -- 2nd Update
By Dave Sebastian
Google has agreed to buy a 6.6% stake in security-monitoring
provider ADT Inc. for $450 million, as part of the search-engine
company's effort to bolster its hardware business and capitalize on
growth in the market for smart-home security products.
The two companies said Monday they would combine Google's Nest
hardware and services with ADT's offerings. ADT sells security and
automation systems to help detect intrusion and hazards such as
smoke, fire and flooding, and it employs personnel to react to
alarms by relaying information to first responders.
ADT expects to offer some Google devices to its customers
starting this year, and the companies will debut a jointly
developed product in 2021, Jim DeVries, ADT's president and chief
executive, told analysts on a conference call. Each company is
committing an additional $150 million, subject to certain
milestones, for joint marketing and product development, among
The partnership will help ADT compete better in the smart-home
market, the company said, adding that it will use transaction
proceeds to expand its business and reduce debt. Google said its
machine-learning capabilities will support ADT's smart-home
offerings, aiming to provide fewer false alarms, more ways to
receive notifications and better detection of potential
ADT shares rocketed nearly 57% in Monday trading, to finish the
trading day at $13.48. Google parent Alphabet Inc. shares edged
down 0.35% to $1,482.76
Google bought Nest, a maker of internet-connected home
electronics, for $3.2 billion in 2014. It renamed the popular
Google Home Mini as Nest Mini last year, and the company placed
under the Nest name an upgraded mesh router that includes
accessories that double as smart speakers.
Google has been investing billions of dollars in recent years to
bolster its hardware unit, which had been a laggard among other
Nest competes with products such as Amazon.com Inc.'s Ring and
other tech-enabled home-security devices. But acquisitions such as
Nest have contributed to antitrust concerns among critics.
Leaders of Google, Amazon, Facebook Inc. and Apple Inc., grilled
on Capitol Hill last week, defended their business practices before
Congress, saying they face stiff competition that forces them to
serve customers and innovate.
ADT said while it aims to develop products with Google, it will
continue to have a relationship with Amazon, with customers being
able to integrate their security systems through Amazon's Alexa
Google's stake in ADT will be in the form of a newly created
class of stock, though it won't have voting rights to appoint or
remove ADT board directors. The transaction is expected to close in
the current quarter.
ADT said Monday its losses in the second quarter were roughly
flat from the year-ago period, when it reported a $104.1 million
loss, and that its monthly performance improved as the quarter
progressed. ADT ended the June quarter with about $45 million in
cash and cash equivalents, it said.
The company is due to release its full second-quarter financial
--Michael Dabaie contributed to this article.
Write to Dave Sebastian at email@example.com
(END) Dow Jones Newswires
August 03, 2020 18:17 ET (22:17 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Historical Stock Chart
From Aug 2020 to Sep 2020
Historical Stock Chart
From Sep 2019 to Sep 2020