ADT Secures More than $1.5B Investment from State Farm, Google

ADT Inc has received a $1.2 billion investment from State Farm as part of a partnership that it hopes will encourage the insurer's many customers to purchase its smoke detection and anti-intrusion products.

Source: Reuters | Published on September 7, 2022

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The company said on Tuesday State Farm would purchase 133.3 million shares, or a near 15% stake, at $9 apiece and get a seat on its board. That will make the closely owned insurer its second-largest investor after Apollo Global Management.

ADT stock rose 10% in early trading on news that the company will receive another $150 million for product development from existing investor Google, the Alphabet Inc-owned search giant that acquired a 6% stake in ADT in 2020.

"These new and expanded partnerships... provide ADT with additional avenues to grow our customer base, strengthen brand loyalty, and lower customer acquisition costs," said ADT CEO Jim DeVries in a statement.

State Farm, which has 13.7 million homeowners insurance customers, will also invest up to $300 million in product development, customer growth, and marketing.

As of the end of last year, ADT had 6.6 million recurring revenue customers.

The company said it was planning to avoid dilution from the State Farm investment by using the proceeds to buy back up to 133.3 million shares of its stock at $9 apiece.

Citi and Evercore served as its financial advisers on the transaction, while State Farm was advised by Morgan Stanley & Co LLC.