Apollo Global Management Nears Acquisition Deal for ADT
February 15 2016 - 8:50PM
Dow Jones News
Private-equity firm Apollo Global Management LLC is nearing a
deal to buy home-security company ADT Corp., according to people
familiar with the matter, in the latest sign market volatility
hasn't derailed the red-hot merger market.
Exact terms of the expected takeover couldn't be learned, but
with a $4.4 billion market value as of Friday, a deal could value
ADT at well north of $5 billion given typical premia and the fact
that the company's shares have fallen sharply.
The deal, which could be announced as soon as Tuesday, would
signal that volatility in equity, debt and other markets this year
hasn't brought takeover activity to a halt. Indeed, activity so far
in 2016 has been surprisingly robust in the wake of the record
activity notched in 2015.
Private-equity buyouts can be even more vulnerable to such
volatility given how much debt firms like Apollo typically employ
to make acquisitions.
The deal would represent one of the biggest leveraged buyouts in
recent years. ADT has more than $5 billion in debt, according to
S&P Capital IQ, and a so-called enterprise value of close to
$10 billion.
Apollo is planning to use its Protection 1 portfolio company as
a vehicle to buy ADT, the people said.
ADT, based in Boca Raton, Fla., has more than 17,000 employees,
according to its website. The company makes security products for
residential customers and businesses, ranging from burglary alarm
systems to wireless cameras and video surveillance.
The company merged with industrial conglomerate Tyco in the late
1990s in a $5.4 billion deal that scuttled a hostile takeover
attempt from Western Resources Inc. Tyco famously used ADT's
Bermuda domicile to relocate the combined company abroad and lower
its tax rate.
In 2012, Tyco's spun off ADT to shareholders in an effort to
refocus the sprawling conglomerate's operations.
ADT would be the latest former Tyco business to find a new home.
Covidien PLC, a former Tyco health care business, was acquired by
Medtronic PLC last year in a $40 billion-plus deal that allowed
Medtronic to move its U.S. headquarters abroad.
Just last month, industrial company Johnson Controls Inc. agreed
to buy another remnant, Tyco International PLC, in a roughly $15
billion deal.
ADT stock is down 30% in the last year.
Matt Jarzemsky contributed to this article.
Write to Dana Mattioli at dana.mattioli@wsj.com and Dana
Cimilluca at dana.cimilluca@wsj.com
(END) Dow Jones Newswires
February 15, 2016 20:35 ET (01:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Johnson Controls (NYSE:JCI)
Historical Stock Chart
From Apr 2024 to May 2024
Johnson Controls (NYSE:JCI)
Historical Stock Chart
From May 2023 to May 2024