Tyco acquires Broadview/Brink's for $2B
SCHAFFHAUSEN, Switzerland, and IRVING, Texas--ADT's parent company, Tyco International, announced this afternoon that it will acquire Broadview Security, formerly Brink's Home Security, for $2 billion.
Tyco plans to combine Broadview with Tyco's ADT security business, the largest alarm company in North America. Broadview Security will be rebranded under the ADT name. This will be the second rebranding for Brink's Home Security dealers within a year. In the fall of 2008, Brink's Home Security spun off from its parent company The Brink's Company.
And on June 30, 2009, Brink's Home Security rebranded, with much fanfare, as Broadview Security.
The cash and stock transaction, which is valued at $42.50 per share, has been unanimously approved by the board of directors of each company.
"Excluding transaction and integration-related expenses, Tyco expects the transaction to become accretive to earnings before special items by approximately $0.07 in the first full year after closing, increasing to approximately $0.14 in year two. The combination is expected to result in operating synergies of approximately $150 million," according to the Tyco press release.
In a prepared statement, Tyco chairman and chief executive officer Ed Breen said: "This transaction provides us the opportunity to further strengthen our position in the residential and commercial security industry, while advancing Tyco's overall strategy to increase its presence in its core security, fire and flow control platforms." He added that "Broadview's strong presence in the North American security market, significant recurring revenue and attractive margins will enhance ADT's financial performance and support our long-term growth in this large, fragmented and highly competitive industry."
Bob Allen, president and CEO of Broadview said in a prepared statement, "We view this transaction as the culmination of these efforts, providing our shareholders with an attractive premium for their shares, including cash consideration and an opportunity to participate in the future growth of Tyco International."
Naren Gursahaney, President of ADT Worldwide said he expects, "this combination to result in an even more efficient, more successful ADT."
Broadview Security has more than 1.3 million recurring revenue accounts throughout "North America with annualized revenue of approximately $565 million. ADT has more than 7.4 million recurring revenue accounts globally and generated revenue of $7.0 billion in fiscal 2009. ADT's North American residential and small business operation, which is the most comparable to Broadview, has 4.8 million recurring revenue accounts and revenue of $2.2 billion in fiscal 2009," according to the Tyco press release
The transaction is expected to close within the second half of Tyco's fiscal year, which began in September. The transaction is subject to customary closing conditions and the approval of Brink's Home Security Holdings shareholders.
Following are the terms of the agreement, according to the Tyco release: For each Brink's Home Security shareholders may elect to receive: (1) $42.50 in cash, subject to proration if the elections would result in total cash consideration exceeding approximately 30% of the total merger consideration as described in further detail below; (2) a combination of $12.75 in cash and a fraction of a Tyco share equal to $29.75 divided by the volume-weighted average price of Tyco's stock on the New York Stock Exchange during the 10-trading day period ending on the fourth full trading day prior to the closing date of the merger, subject to a collar between $32.97 and $40.29; or (3) Tyco shares equal to $42.50 divided by the volume-weighted average price described in (2) above, subject to the same collar. The stock component of the consideration is expected to be tax-free to Brink's Home Security shareholders. As noted above, in the event the cash consideration to be paid to Brink's Home Security shareholders in the transaction exceeds approximately 30% of the total merger consideration, which is equal to approximately $584.5 million, plus an amount determined by multiplying $12.75 by the number of Brink's Home Security options that are exercised prior to closing (the "Available Cash Amount"), shareholders making a cash election will receive a mix of cash and Tyco shares for their shares of Brink's Home Security common stock in amounts that allow the overall cash consideration to be paid by Tyco to be capped at the Available Cash Amount.
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