In a business move that began last year when Apollo Global Management LLC purchased ADT for approximately $6.9 billion through its existing portfolio company Protection One, ADT, the nationwide leader in residential security, finalized its plans to seek as much $2.1 billion in its initial public offering.
In documents filed with the United States Securities and Exchange Commission last Friday, ADT Inc. is looking to sell 111.1 million shares ranging from $17 to $19 each, which could value the IPO at close to $14.4 billion based on the high-end shares. ADT became a privately held company in the 2016 buy-out by Apollo, a leading global alternative investment manager with offices in New York, Los Angeles, Houston, Bethesda, Chicago, St. Louis, Toronto, London, Frankfurt, Madrid, Luxembourg, Mumbai, Delhi, Singapore, Hong Kong, and Shanghai. The intent of the pending IPO is to help ADT pay down some of its corporate debt and redeem preferred securities held by Koch Industries, though Apollo will still retain ownership of at least 85 percent of ADT following the IPO as stated in the SEC filing documents.
ADT currently serves more than 7.2 million residential and business customers, making it the largest monitoring and service company in the United States and Canada, supported by approximately 18,000 employees and visiting approximately 10,000 homes and businesses daily. ADT handles an average of 15 million alarms annually and provides support to its clients from over 200 sales and service locations and through its 12 monitoring centers listed by Underwriters Laboratories.
“The ADT brand is synonymous with security and, as the most recognized and trusted brand in the industry, is a key driver of our success. A 2017 survey found that the ADT brand had approximately 95 percent brand awareness, and nearly half of ADT customers surveyed did not consider any other security alarm provider during their purchase process. We estimate that we are approximately five times larger than the next largest residential competitor, with an approximate 30 percent market share of the residential monitored security industry in the United States and Canada,” stated ADT in its filing documents.
The ADT statement contained in the filing continued: “Since the ADT Acquisition and our integration with Protection One, a new executive management team has driven a transformation that has resulted in a 'New ADT' with a substantially improved customer experience and operating culture. As part of the ADT Acquisition, we combined the brand, history, and scale of legacy ADT with the customer service and operational excellence of Protection One to create an industry leader with the broadest portfolio, largest scale, and leading financial and operating metrics.
“Our transformation has been led by our Chief Executive Officer Tim Whall, an industry veteran and former Protection One Chief Executive Officer with more than 35 years of industry experience, and a senior team comprised of both industry veterans and executives with deep functional expertise hired from outside the industry. This leadership team has coalesced to drive a culture centered on the customer, and one where all of our employees are fully aligned to the importance of our mission of helping our customers protect and connect to what matters most—their families, homes, and businesses. In addition to customer centricity, our internal cultural markers are characterized by a bias to act with urgency, high levels of teamwork and collaboration, individual accountability, and discretionary effort.
“Through high levels of customer satisfaction and disciplined operating processes, the new management team has notably improved customer retention, reduced customer acquisition costs, and improved profitability, thereby improving cash flow generation and increasing expected rates of return on new customer acquisition expenditures.”
Morgan Stanley and Goldman Sachs Group Inc. are leading the offering. The company has applied to list its shares on the New York Stock Exchange under the ticker ADT.
