State Farm Invests $1.2 Billion, Acquires 15% of ADT
Mega-insurance company State Farm is taking ownership of a significant portion of mega-security provider ADT.
Likewise, 2 years ago Google invested in ADT (a 6.6% stake) and ADT says Google is committing more funding to ADT. However, ADT's stock is still down 33% since when it went public again in 2018.
This builds on the trend of home security companies expanding into insurance, e.g. see Vivint 'Smart' Home Insurance Examined.
In this note, we examine this newest investment and the potential for ADT rebounding with Google and State Farm.
ADT ********
*** * *** ***** ** **** deal:
State **** **********
***** **** ** **** *****, **** $82+ ********* **** *******, **** **** *** **** ** ADT. ********, ***** **** *** **+ million *********, **** **** **** *** that ** ***'* (*.* *******).
Integrating *** *** ***** ****
*** **** ** *********** ***'* ********** with ***** ****'* ******** ** ****** risks/losses *** ***** **** *********, **** ADT ********** ** ** *:
*** ********** ******** **** ** ******* substantial ******** ***** **** ***** **** technology ** ****** *** ******** ****** related ** *****, ****, ********* *** other ************* ******* *****
*** ******** **** ***** ******** ** how *** *** ****** ****** *** fire *** ***** ****** ** **** as **** *****-***:
Expand *** ***** **** ***** **** *********
********, ***'* **** **** ********** *** State **** *** **** ****** ***'* sales ** ***** **** *********:
Slow ******** ****** ********
*******, *** ****** ** ***** ******** to ** ***** ****** **** *** next *** ***** **** *** ******* only ********** ~*.*% **** ****** ** CSB (******** *** ***** ********) *********:
***** ***** **** ** ****** $* per ***** (* ~**% ******* **** the ***** ***** ***** ** **** deal ** $*.**), *** ***** ***** is ** ~$*, ** ** ***** trading ** * ***** ******** *** to *** ***** ***** **** ** paying, ** *** ******* ***** *****:
Outlook **** *******
**** ***** **** ** ****** **** a *********** ****** ** *** ***** (at * ****** *******) ** * good **** *** ***, ********** ******** to ***** **** ********** **** *** entrants (**** ** **********) ***** ******* incumbents **** ***. *** ******* ** Google *** *** *** ***** ****** that *******.
*******, *** *******'* ***** *********** ***** price *** ****** ****** ************, **** with *** ******* ** ***** *** giant ********* **** *********, ***** **** industry *** ********* ****** *** ****** much ****** *** ** ***.
***** *** ******* ********** ********** ****** a **** ******* ** *** **** for **** *****, *** "**********" *** referring ** *** ***** ****/********* ******** side ** *** ****, ** *** ADT ******** **** **** **** ** provided ******** ** ** **** ****** their ********* ** ****** * ******* smart **** ********* ********, ***** ***** be *** ***** ** *** **** - ****** ** *** **** **** about ************* *** ****** ******** ****** these ***** **** *** ******** ******** that **** ****** ********** ********.
*** ******* **** ********** **** ***** major ********* ******** **** ** ********* in **** ** *** ******* **** (ie ****** * ***** ** *********** security *********), ** **** **** *** create *********** ********* ** ***** ****'*.
* ***** *** **** ***** ****'* valuation ***** ** *** *** ********** affected **. ***'* - *** ** course, ***** **** ** * ******* company ** ***** ** ** ********* stick. *** *** ******** **** ** coming ******* **** *** ****.
**** ** **'* ** ******** *** revolutionary ** *** ******** *** *****'* ADT **** ** **** *** * lot ** *****? **** ***** ******** ADT's ***** ***** *****?
***** **** **** **** **** * billion ***** *** **. ***** **** a *** ** ***** :)
** *********** * ******* *******, ***** **** would *** **** ******** **** / access, ***. *** *** ***** ********* that ******* ** ******* (**** ****, etc.).
*******, ***** **** ******** ******** *****, stock ** *** ******* *** *********** cash ****.
**** *****, ***** **** ****** **** ADT *****, ***** **** *** **** ADT ***** ********, ***** *** ****, maybe *** ****.
**** ***** **** *** **** *** doesn't ******** *** ********* ** ******* of **** *** ******?
*** ***** **** *** ********* **** something? *** ****** ******* ***** *** absolute **** *** ***** ******** ****-********, by *******/****** ******, ** ******* ***** losses ** ******** *****. ********** ******* like ***, ******, ***** ********, ***********, have **** *********** **** **** **/*** Enforcement (*** ** ******* ** **% false ******) ****** **** *** ********* witnessed *** *******. **** *** *** monitoring ******** ********, ***-**, ********* ******** by ***** ************, ******** ******** ** deterrent ***** ********* **** ********* ********. Majority ** *** ******** *** ********* are ******** ********** ******** “********” ***** systems ** **, **** **** ** no **** ********.
* ***** *****, ******* ***** **** paying $* *** *****, *** ** still ******* ** ***** ** $*:
******, ***** *** ******* **** (*** 2nd) *****, *** ***** *** ******** slightly **** *** **** * *****.
*** * ************ ******* **** ***** State ****'* ********* *********** ** ***.
**** ** ** ******* *** ** still ***** **********. ****** **** ** the ********** *** ****** **** *** EPS/Earnings *** *****. *** *** ***** are ** *** ****** ** *** overdue "*********" ** ***** ***-****-*** ******** models. ******, ***** ****, *** ******, can ******* ***** ******** ** ******* on *** ***** ****** ** ***.
**** ** ***********. **** ** ****. We ******* **** ** **** ******** and ******** ** ****** **** ******… the ****** *** *** ********/ ***** (overlooking ****** ***** ****** **********). ****** to *** *** ********, ******, *** year *** ******** *****. ***** ***** is ********, ** *** *+ ******* existing *** ****** ********* ********* ****** customers **** ************ **** ******** ***/********* ******* *******. ***** *********, *** ******* *********, could ******* *** ***** *** ******** models. ***** *** ********* *** ******** of *** *****, **** *** **** downgraded ** **** ***/****** ****** ** be “********” ****** **** *** ** no ******** *** **** ********. ********** due ** *** **** **% ***** alarms, *** ***/*********** ****** ********, ***** consumes ** **** ** **% ** police *******, *** *** ** ********. Most ********* ********* ***** ********* **** response, *** *** ******* **…... = attrition *** *********.
******:*** *** ********* ***** ******** ** 3 ****** **** ***** ****.
*** **** ******** ******* ** * discount **** ** **** ***** ** the ******** ****** ** ***** *** system **** **** ***** ****:
******** **-***** ********** ******** ******** ** discounted **** ** $**.****. ********* **** to ***** **** ********* ************* *** agree ** ***** *** ******* *** system ***** **** **** ***** **** under ********** *****. ********* *** ****** data ******* **** ** ******* ***-********** rate ******** ** $**.** **.
**** ***** ***** **** / *** ***** page, ******-****** *****:
******* ******** **** ******** **** ************** **** ***** **** **** *** this ** ***** ***** ******** *** services *** **** *** ******** *** to ******** ** *** ***** **** or *** *** ***** **** ********:
***** ********* **** ** *** ********* who *** **** ***** **** ********** insurance ********* *** ***** ** ***** ADT ** ***** **** ***** **** information ***** ***** *******, **********, *** any ******** **** ********* ****** ***** (excluding ***** *** *****) *** ***purposes ** *********** any discounts, rates, or other terms for products and services that may ** ******* ** ***** **** and for other internal business purposes. If during the term of your monitoring contract, your State **** ********** ********* ****** is not issued or is terminated *** *** ****** ** *** ****** **** ******* for ADT to share your ADT system usage data and other data described above, your monthly monitoring rate will automatically ******** ** $**.** plus tax [emphasis added]
******: **** ******* *** **** ***** to *** *** **********:*** *** ***** **** ******** ******** Discounts *** **** ********* **** *****
*** ****** ******* ************ ***** **** ****. ** **** was **** * ***** ****, (*) the ***** ***** ***** ** ** far ****** **** **** ***** **** paid *** (*) *** ***** ** setting **** ****** ************ *** ******.
* ***** **** ** * **** deal *** *** *** ******** *** faced * *** ** ******** **** but **** **** ** **** ****** to **** ****** / ******** **** DIY **** ** * "**********" ** SIW *********.