ADT-Apollo Merger: What Investors Should Know about ADT



ADT is one of the biggest names in home security

ADT (ADT) is a leading provider of monitored security, interactive home and business automation, and related monitoring services in the US and Canada. Currently, ADT serves ~6.6 million customers. This makes it the largest security company in North America. It employs about 17,100 people. It provides sales, installation, and service as well as a monitoring network. Apollo (APO) is buying ADT. It will merge its own security service, Protection 1, into ADT.

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The company breaks its operations into two operating segments—the US and Canada. Most of its business is in the US. The US accounts for 93% of its revenue. Most of ADT’s monitoring and home or business automation services and maintenance services are governed by multiyear contracts with automatic renewal provisions. This creates a steady recurring revenue stream. In 2015, recurring revenue contracts accounted for 93% of ADT’s revenue.

ADT’s monitored security and home or business automation offerings involve the installation and monitoring of residential and business security and premises automation systems designed to detect intrusion, control access, and react to movement, smoke, carbon monoxide, flooding, temperature, and other environmental conditions and hazards. It also addresses personal emergencies such as injuries, medical emergencies, or incapacitation. ADT Pulse was added in 2010. It allows customers to remotely monitor and manage their home and business. ADT continues to add new technologies to the ADT Pulse offering.

Merger arbitrage resources

Other important merger spreads include the deal between Baker Hughes (BHI) and Halliburton (HAL) and KLA-Tencor (KLAC) and Lam Research (LRCX). For a primer on risk arbitrage investing, read Merger Arbitrage Must-Knows: A Key Guide for Investors.

Investors who are interested in trading in the tech sector can look at the iShares Global Technology ETF (IXN).


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