ADT Inc, a provider of security, automation, and smart home solutions serving consumer and business customers in the United States, announced that it has acquired Defenders, its largest independent dealer and only Authorised Premier Provider, for a purchase price of approximately $381 million. As part of the transaction, Defenders founder David P. Lindsey and Jessica A. Lindsey received approximately 16.3 million shares of ADT common stock for 100% of their ownership in Defenders, while the remaining $260 million of consideration was paid in cash to retire existing Defenders debt, fund other liabilities, and pay transaction expenses. The cash consideration was partially funded from existing revolving credit facilities. Financial and operational advantages Together, we will have greater marketing efficiency through unified brand messaging: “We’re excited to officially join forces with the impressive Defenders team after successfully partnering with them for nearly 22 years so that, as one company, we can create a unique and simplified platform,” said Jim DeVries, ADT’s President and Chief Executive Officer. “This opportunistic acquisition creates numerous strategic, financial and operational advantages for ADT, and is consistent with our stated goal of driving down the capital intensity of the business as we seek to drive long-term, profitable growth.” Mr. DeVries continued, “Together, we will have greater marketing efficiency through unified brand messaging, enhanced control of the customer experience, and the ability to provide a full suite of innovative security and home automation products, including consumer financing, to a complementary geographic footprint. Over time, we also expect lower subscriber acquisition costs, an improved revenue payback period, and new account gains from the optimisation of our combined ecosystem.” Smart home solutions “We have built our business by partnering with ADT to sell and install state-of-the-art security systems, helping to protect more than 2.2 million families through our best-in-class marketing team and expert knowledge of the industry,” said David Lindsey, Chairman and Founder, Defenders. “Given this longstanding and productive relationship, we are proud that this transaction will integrate us even closer into the ADT team, and I am excited to be a significant shareholder and see the benefits we are able to deliver to customers as a combined company.” “We are thrilled to join the ADT team,” said Jim Boyce, President & CEO, Defenders. “This acquisition brings our direct response marketing capabilities, best in class sales expertise and national reach to a provider of security, automation, and smart home solutions. Together, we will be better positioned to leverage the trusted ADT brand, improve the combined company’s go-to-market operations and deliver an enhanced customer experience.” Simplifies Operating Ecosystem Strategic and Financial Benefits of Transaction : Enhances Customer Experience: Provides ability to drive a unified brand message and premium customer experience to the majority of ADT’s residential customers. Simplifies Operating Ecosystem: Establishes a single party focused on the customer experience and lifetime value, and reduces channel conflict and potential for customer confusion. Improves Marketing Prowess: Leverages Defenders’ strengths in customer acquisition to drive optimised spend across channels and enable more effective marketing messaging and customer segmentation. Innovative equipment and service offerings Increases Go to Market Efficiency: Significantly enhances ability to bring new initiatives to a broader customer base more quickly, including consumer financing, DIY, and innovative equipment and service offerings. Drives Capital Efficiency: Results in a more capital efficient ADT through the elimination of dealer “margin.” Expected to be modestly beneficial to 2020 net cash provided by operating activities and free cash flow before special items and to create synergies to further drive net cash provided by operating activities and free cash flow before special items in subsequent years.
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