Industry Experts Weigh In on Apollo’s Bold Move to Acquire ADT
SSI spoke to half a dozen industry stakeholders from across the financial, M&A, integration and consultant professions to gain a deeper perspective of the $7 billion mega deal for ADT Corp.
Shockwaves began rippling across the security industry landscape Monday evening when word broke Apollo Global Management could soon announce a multibillion bid for ADT Corp. Industry watchers didn’t have to wait long for confirmation of what is the biggest leveraged buyout thus far in 2016, and one of the biggest of its kind in recent years.
Left in the wake of Tuesday morning’s official unveiling of the near $7 billion transaction are myriad questions and curiosities about how the industry’s largest home security provider will be merged with Apollo’s two other recently acquired gems, Protection 1 and ASG Security. The combined company, led by P1 CEO Tim Whall, will reportedly generate annual revenue topping $4.2 billion.
Still more questions and interest in the transaction arise when considered in the wider context of what lasting impact the deal – and the combined company – is likely to have on the industry. Read on to hear insights and perspectives from half a dozen industry stakeholders SSI spoke with from across the financial, M&A, integration and consultant professions
“We are definitely starting 2016 on a high note and I’m sure there is more to come. This transaction is further confirmation on how relevant private equity is to the security industry,” said Peter Giacalone, president of consultation firm Giacalone Associates, and a contributing columnist to SSI‘s “Monitoring Matters” column. “If anyone didn’t know before – seeing how Apollo first structured the Protection 1-ASG Security transaction – and now without taking a breath acquiring the largest security company in the U.S., they do now.”
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David Stang, founder and president of Stang Capital Advisory, said he wasn’t necessarily surprised by news of the merger since ADT’s stock price had been trading at an unfairly low price.
“Apollo recognized this and is taking advantage of a unique opportunity to combine P1 and ASG’s strong commercial business with ADT’s residential market dominance,” he said.
Overall, Stang said he believes the merger is good for the security industry. The purchase price reflects more fairly on the solid core value of companies in the industry, as evidenced by Ascent Capital’s strong stock price increase upon announcement of the ADT deal.
“The new ADT will certainly be a dominant player in the industry, but the consolidation of the three leading companies will also leave meaningful space for other companies to expand,” Stang said.
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