What ADT’s New Partnership With Google Is All About
Google will invest $450 million in home and small business security firm ADT which will begin offering Google Nest products later this year.
ADT Inc. (NYSE: ADT | ADT Price Prediction) saw a massive gain on Monday after the firm announced a partnership with Google to create the next generation of smart home security. Ultimately, this partnership is looking to combine Google Nest’s hardware and services with ADT’s installation, service and monitoring network.
The partnership will integrate Google’s hardware and services and ADT’s DIY and professionally installed smart home security solutions to innovate the residential and small business security industry. ADT expects to offer certain Google devices to its customers beginning this year and to expand the integration in 2021.
Along with this partnership, Google will be making a $450 million investment in ADT, in return Google will receive a newly created Class B common stock having all of the rights and preferences of ADT’s common stock minus the right to vote.
After the closing of this deal, Google will own 6.6% of ADT’s outstanding common stock. ADT expects to use the proceeds from this investment to fuel growth and reduce leverage over time.
Looking forward, each company will commit an additional $150 million, based on the achievement of certain milestones, to be used for co-marketing, product development, technology and employee training to advance the partnership.
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These investments are expected to accelerate ADT’s capital-efficient growth and drive broader consumer awareness and deeper product innovation for both companies in the fragmented yet rapidly expanding smart home market.
Note that the company’s market cap was below $7 billion prior to the stock moving on Monday. Now the market cap is nearly $11 billion.
ADT stock was last seen up about 58% at $13.58, with a 52-week range of $3.40 to $17.21. The consensus analyst price target is $8.28.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
