ADT Merges With Protection 1 In $15 Billion Deal

By John Honovich, Published Feb 16, 2016, 12:00am EST (Info+)

The world's least favorite security company, ADT, is being merged [link no longer available] in a mega deal with Protection 1.

The ADT brand, though, is staying, as they note "the combined company will operate primarily under the ADT brand."

Price ******* / *****

** *** ******** **** *** ***, they *** ***** ******** ** * substantial ******* ** ~**% ** ***** current ***** *****. *******, ***'* ***** price *** ********** *** *** **** *** years, ******* ** * *** ***** to *** ****, ** ***** ** the ***** ***** *****:

Going ***** **********

********, *** *** ********** * ******* annual ******** ** **** **** $* billion ***,*** ***** ****~$*.* *******. ****** *** ****** ***** of *** ******** *** *********, *** stated **** ** ** ****** *** beyond *********** **** ********** *****, **** the *****:

"********** *’* ****** ********** ******** **** speed ***’* ********* **** *** ********** sector ********* ** ********** ********** ***** and ********* ****** ****** * **** matched ******** *********."

*** ********* ***** ** ******** ** Protection *'* *** (*** **** ** be *** *** ** ****) ***** about ***** ***** ** ********** *** the ********** *** ***:

****, ** *** *********, **'* *** talks ***** ***'* **** ****** ********* than ******, * ****** ** ***** assume **** ***** **** ** ********* once **** ********** ***.

Debt ****

** ** *** ****, *** ****** company, ****** *** *** **-********* *** raising ****** $* ******* ** ****, in ******** ** *** ~$* ******* in ******** **** **** **** ****** (i.e., "***’* ********* $*.*** ******* ** total ****** ********* ***** **** ** guaranteed ** ********** *"). 

** ****, **** ** * ****** leveraged ***********, ********** *** **** ** the ******** *******'* *********** ** *** security ****** ********.

Reduce ********* / *******

**** *** *** ** **** *********** branch ****** ******** ********** ***** *******. The ************* ** ***** ******* *** reduction ** ***** / ******** ***** be * *********** ****** ********* *** the ******** ******.

The *** ****

*** **** *********** **** ** *** growth ** *** *** ******. ** the **** ****, *** ********* ****** has ************ **** *** '****' ********* performer ** *** ******** ********, ***** its **** ********* *** *** **********. The ********* ** **** **** ******** have **** *** *******, *** ********** high *****, **** **** ***** ***** of *** ********* ****** *** **** targeted **** ******* **** *** ************. Especially ** *** ***** ***, ********* like********** (*** *** **** *******)******** (*** *** **** *******)**** *********** *******.

* *** ******** **** ** *** well *** / ** *** ******** growing *** **** *** ****** ** the ********* ******* ** *** *** to *** ***** ** *** ******.

Improve ***?

*******, ** **** ** *********** ** P1 (***** *** **** *** ****) can ******* *** *** ******* ********** **** *********. ****** *********** *** ******** ************ could **** * ******** ********** ** the ********* *********** / ****** ***********.

 

**********

** ******** ** ******** *******, *** ********* **** ***** *** **** ****** **** **** ***.

Comments (12)

I had thought protection 1 had been sold and merged with ASG, a few months ago. This is the new combined company, I'm assuming, that is being acquired by ADT?

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This is the new, combined company acquiring ADT.

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Right, thanks. I see now John mentions Apollo above.

Big Apollonian bet, were they even in security before the ASG deal?

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Here's the real question...whats going to happen with CMS. Any alarm companies using CMS as their monitoring station should be deeply concerned. It's my understanding that ASG is going to be moving 250,000 accounts to CMS. That's no small number. Sounds like CMS is going to become less of a 3rd party monitoring company and more of an ADT/Protection1/ASG center.

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If my plan were to build a company that I would pass along to my family, I would certainly look at alternate central stations.

What if the plan is ultimately an exit strategy of selling the company?

Having the accounts in a central station with a transaction history and no requirement to reprogram or convert the database can lead to a higher resale value. Just a little "Devil's Advocate" from someone who worked in that side of the industry. It could lead to a faster sale and a higher multiple.

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Since ADT is now going after commercial work, does that mean Tyco and ADT will be competing for the same projects? Could be confusing for end users not up to speed on current events.

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John, yes, and ADT has been going after commercial work since late 2014, when the TycoIS / ADT agreement ended.

What's interesting to me is that you have a lot of companies focusing on the commercial market but the commercial market is not growing much (top line) at all, so by definition, many are going to lose.

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I was at an open house this weekend, it was an empty house that had been bought and refurbed by a contractor and professionally staged, but sitting on the floor in a corner was a simplisafe hub. I think it had been 'installed' by the real estate agent/partner. That's when it struck me that we've passed the tipping point from hobbyist/techi DIY products to the broader market of 'so simple anyone can do that'.

In case we've all forgotten, Apple didn't invent the smartphone, Microsoft (and others) had products years earlier, but what Apple did do is take it from a techie's only niche product to something anyone could easily use.

So, I'd suggest they've bought ATD at the peak (Pelco anyone?) and this will not turn out well.

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"That's when it struck me that we've passed the tipping point from hobbyist/techi DIY products to the broader market of 'so simple anyone can do that'."

They may (at least somewhat) agree with you, ergo their emphasis on the commercial market.

I am curious to see how it will all work out, between Tyco/JCI, ADT/P1 and 10,000 independent integrators all fighting it out for the commercial market that is not really growing.

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Apple didn't invent the smartphone, Microsoft (and others) had products years earlier, but what Apple did do is take it from a techie's only niche product to something anyone could easily use.
So, I'd suggest they've bought ATD at the peak (Pelco anyone?) and this will not turn out well.

Apple still makes a buck or two, no?

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I think he's implying that a company will do to traditional home security incumbents what Apple did to earlier mobile phone manufacturers.

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Exactly, I suspect it won't be one company, but several. Security systems are a reluctant cost, customers would rather spend their money on other things. DIY means significantly lower overhead for the provider and therefore lower cost to the customer.

Paradigm shifts in industry tend to go through five steps (how convenient!)

Conception - We, the industry can see the next step

Realization - There are products available

Consideration - We think the new products are awesome and consider them first but typically fall back to the old ones.

Adoption - The new products are not just being quoted, but sold with success

Entrenchment - The new products are the 'old' products

IP cameras or cloud services are both great examples of having gone through these stages. For example, I can remember when the feedback was that virtually everything being quoted by our sales teams was with IP cameras, but the actual sales numbers were quite different.

I'd suggest that the DIY alarm market is maybe at the consideration stage.

Thoughts?

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