ADT (NYSE: ADT) announced on Tuesday it will sell its commercial security, fire and life safety unit to private equity firm GTCR for $1.6 billion.
ADT expects to use the net proceeds of about $1.5 billion from the deal to cut debt.
In the announcement, ADT CEO Jim DeVries said the decision to divest the commercial business would allow the company to focus on its portfolio of growth opportunities in consumer markets.
“The sale enables ADT to monetize the commercial business at an attractive valuation and accelerate our debt reduction goals. With greater financial flexibility, we will be better positioned to grow through our strategic differentiators and innovative offerings, including our partnerships with Google and State Farm,” DeVries said. “We will continue our journey to be the premier provider of safe, smart and sustainable solutions that meet the evolved definition of what safety means to consumers today.”
ADT is among the leading national providers of electronic security and fire safety services to commercial enterprises and multi-site national accounts. ADT Commercial was formed through ADT’s 2017 merger with Protection 1 (P1), a prior GTCR investment. GTCR will partner with former P1 executives Tim Whall and Dan Bresingham to acquire ADT Commercial.
Bresingham, current leader of ADT Commercial, will become CEO of the standalone business upon close. Whall will join the company’s Board at close and serve as an active director, according to a GTCR announcement. Whall brings more than 30 years of experience in the security industry and this will mark his fourth partnership with GTCR in the security space.
Based in Irving, Texas, ADT Commercial has built a national footprint with more than 5,300 colleagues across over 100 locations servicing more than 300,000 customer sites.
GTCR and ADT Commercial will implement a strategy to drive continued growth and innovation, with additional capital available to help fund strategic M&A opportunities, the GTCR announcement stated.
“We are excited to again partner with Dan and Tim, as well as the incredible team at ADTC,” said David Donnini, Managing Director and Head of Business & Consumer Services at GTCR. “This is a unique opportunity to invest in a successful business that we know well and helped develop, alongside partners that we have worked with for two decades. We believe making ADTC a standalone company strengthens its competitive positioning, sets up ADTC for future growth and builds upon GTCR's history of successfully transforming businesses in the sector.”
ADT Commercial marks GTCR's fourth investment in the security and fire industry, including the acquisition of Cambridge Protection Industries, the carveout of Honeywell Security Monitoring (HSM) and the take private of P1. Bresingham previously served as the CFO of HSM and P1. Whall previously served as the COO of Cambridge, the CEO of HSM and the CEO of P1.
“We have built a highly skilled team and strong platform at ADTC that is well positioned for long-term success as a standalone organization," said Bresingham. “We know that GTCR will be a great partner given our shared experience and their focus on growth while delivering exceptional service. Together, we will continue to invest in expansion, innovation and in the highest quality of customer service.”
The transaction is expected to close in the fourth quarter of 2023 subject to customary regulatory approvals.
Raymond James & Associates and Stifel served as financial advisors to GTCR. Citi and RBC Capital Markets are acting as financial advisors to ADT. Kirkland & Ellis LLP provided legal counsel to GTCR. Cravath, Swaine & Moore LLP provided legal counsel to ADT.
