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ADT Shares Gain 58% on Google's $450M Investment to Develop Smart Home Security Offering

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Shares of ADT Inc. reached a new 52-week high after the firm reported it is joining with Google to create a smart home security offering that will integrate Nest hardware with its security platforms.

ADT Inc. (ADT:NYSE) today announced that it is entering into a long-term partnership with Alphabet Inc. (Google) (GOOGL:NASDAQ) to create the next generation of smart home security offerings. The company advised that "the partnership will combine Nest's award-winning hardware and services, powered by Google's machine learning technology, with ADT's installation, service and professional monitoring network to create a more helpful smart home and integrated experience for customers across the U.S."

The firms indicated that plans are to integrate ADT's smart home security solutions with Google's hardware and services in order to innovate the residential and small business security industry.

ADT's President and CEO Jim DeVries commented, "We are thrilled to partner with Google to provide the smart home market with a strong, differentiated product and service offering that integrates the best technology, hardware and smart home security expertise from our two brands...Google's partnership and financial investment in ADT underscores the depth of our joint commitment to the smart home and security markets. Our entire leadership team is looking forward to continuing our work with Google as we define the future of helpful home security and build a productive long-term partnership."

Rishi Chandra, VP and General Manager of Nest, remarked, "We're excited to partner with ADT to further our mission of building helpful devices for the home...ADT is a leader in smart home security, and I look forward to working with the team to create innovative smart home security solutions that help everyone feel safe and protected."

The companies stated that the objectives of the arrangement are to pair ADT's 20,000 professionals together with Google's suite of home hardware, manufacturing and technology expertise. Together, the firms plan to offer customers a simplified yet advanced and innovative integrated home security solution that will be the cornerstone of the new helpful home. ADT stated that it expects that it will be in a position to offer certain Google devices to its customers starting this year with further expansion anticipated into 2021.

According to the terms of the strategic investment agreement, "Google will be making a $450 million investment in ADT in exchange for shares of a newly created Class B common stock having all of the rights and preferences of ADT's common stock except for the right to vote on the election, appointment or removal of directors." The investment is expected to close in Q3/20 subject to customary closing conditions and when completed Google will own 6.6% of ADT's outstanding aggregate common equity.

In addition to the investment by Google in ADT shares, as part of the partnering agreement both companies will be committing an additional $150 million each subject to the achieving certain milestones that will be utilized for co-marketing, product development, technology and employee training.

ADT is a provider of security, smart home and business solutions based in Boca Raton, Fla. The company employs greater than 20,000 people and serves over 6 million customers from more than 300 locations and nine monitoring centers and states it operates "the largest network of security professionals in the U.S." The firm's product offerings include home security systems, fire and life safety, identity theft protection, security cameras and a mobile safety application for families called ADT Go.

ADT started off the day with a market capitalization of around $6.5 billion with approximately 760.4 million shares outstanding and a short interest of about 2.4%. ADT shares opened more than 60% higher today at $13.89 (+$5.28, +61.32%) over Friday's $8.61 closing price and reached a new 52-week high price this morning of $17.21. The stock has traded today between $13.17 and $17.21 per share and is currently trading at $13.86 (+$5.25, +60.98%).


1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
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