Private-equity firm Apollo Global Management LLC (NYSE: APO) agreed to buy home-security monitoring company ADT Corp. (NYSE: ADT) for about $6.9 billion, marking the largest leveraged buyout so far this year.
Apollo plans to pay $42 a share in cash for the acquisition, valuating the Boca Raton, Florida-based Company for $6.9 billion. That represents a 56 percent premium over ADT’s closing price on Friday.
ADT shares jumped 49.46% to $40.16 at 11:20 a.m. in New York.
ADT Corporation, an offshoot of the former Tyco conglomerate, provides residential and small business electronic security, fire protection and other related alarm monitoring services in 35 countries.
Apollo also said that it planed to merge ADT with Protection 1, a home-security company it already owns. The combined company will generate $318 million in monthly revenue and total annual sales of at least $4.2 billion. “The combined company will be a market leader with a powerful brand and scale resulting in an enhanced overall customer experience,” current Protection 1 CEO and president Timothy Whall said.
ADT’s board had approved the transaction. But during a 40-day “go-shop” period, ADT still can look for a better deal than the one offered by Apollo.
Apollo said that the deal would be financed by $4.7 new debt, including $1.6 billion new first-lien loans and $3.1 billion in second-lien loans. It will also be financed by $750 million preferred securities through the investment arm of Koch Industries, according to the statement.
“We are tremendously excited by this unique opportunity to combine two premier businesses,” said Apollo senior partner Marc Becker in a statement. “This transaction provides the opportunity to dramatically enhance our position in the large, fragmented and growing residential and business interactive electronic monitoring industry."