Google to buy stake in ADT in home security push for US$450 million
NEW YORK: Alphabet Inc’s Google is picking up a 6.6 per cent stake in ADT Inc for US$450 million, betting on the home security company’s strong customer base and an army of technicians to drive sales of its Nest devices.
ADT shares nearly doubled to hit a high of US$17.2 and traded well above their IPO price of US$14 for the first time since going public in 2018, briefly valuing the company at about US$13 billion.
The investment gives ADT the backing of a high-profile technology partner and broadens its services business. In return, Google gets access to about 6.5 million customers, strengthening its presence as it competes with Amazon.com’s Ring and Boston-based SimpliSafe, among others.
ADT said on Monday that the two companies would work on ways to package popular Google products like Home Mini, Nest Thermostat and Nest Wifi with ADT’s strength in installation and maintenance.
“Later this year, we will begin integrating Google devices and make them available for installations to our customers,” ADT Chief Executive Officer Jim DeVries told Reuters.
“We will exclusively support Nest products,” DeVries said, adding that the companies will build products together and start rolling them out next year.
The companies will commit an additional US$150 million each for co-marketing, product development, technology and employee training, ADT said.
Google will buy 54.7 million newly created Class B shares of ADT for US$8.22 each with no voting rights, the Boca Raton, Florida-based company said in a filing.
Founded in 1874, ADT is backed by private-equity firm Apollo Global Management LLC, which owns 83.5 per cent of the company, according to Refinitiv data. Apollo had taken ADT private in a nearly US$7 billion deal in 2016.