Apollo Global Management LLC’s (NYSE:APO) affiliates have agreed to acquire The ADT Corporation (NYSE:ADT) for $42 a share in cash representing a premium of 56% over the closing price on Friday. The total payout would be about $7 billion, and when integrated with Protection 1, the aggregate transaction value would be about $15 billion. The company disclosed that its merged entity would operate under the brand name of ADT.
Financing the Deal
Apollo Global Management indicated that its transaction was fully committed to financing. As part of it, $1.555 billion would be the first lien term loans while another $3.14 billion would be in the form of new second lien financing. Another $750 million would be raised from the preferred securities to the affiliate of Koch Equity Development LLC. Aside from that, another $4.5 billion would be equity contribution from funds managed by it, as well as, co-investors.
The company indicated that Protection 1 would agree to a fresh $255 million first lien revolving facility taking the total senior secured revolving facility to $350 million. Also, Protection 1 would continue to have its current $1.095 billion and $260 million as the first lien and second lien term loans. After the merger closure, Protection 1 plans to redeem all the outstanding senior unsecured notes due July 2017 and April 2019. In the end, Protection 1 guarantees $3.75 billion of senior unsecured notes that will continue to remain.
Management Comments
Protection 1 President and CEO, Timothy Whall, would be the CEO of the integrated business after the merger. He said that the integrated firm would be a leader with the influential brand, as well as, scale that would result in an improved customer experience. He also said that its strong presence would fasten the expansion in the commercial sector with the help of higher commercial sales, as well as, technical skills.
ADT President and CEO, Naren Gursahaney, said that he was happy to strengthen the quality of its customer base apart from the enhanced service, as well as, the retention. He said that its innovative solutions like its Pulse platform would extend its leadership position in the home security segment.