Tyco to acquire Broadview/Brinks, combine with ADT. What did they pay?

Huge news here: Tyco, parent company of ADT, is going to buy Broadview Security, formerly Brink's Home Security for $2B. I'll have much more on this soon, but for now here's the release:
Tyco International to Acquire Broadview Security 2010-01-18 16:45 ET - News Release Also News Release (U-TYC) TYCO INTL LTD BERMUDA SCHAFFHAUSEN, Switzerland and IRVING, Texas, Jan. 18 /PRNewswire-FirstCall/ -- Tyco International Ltd. and Brink's Home Security Holdings, Inc. today announced a definitive agreement for Tyco to acquire Brink's Home Security Holdings, now operating as Broadview Security. Following the closing of the transaction, Tyco intends to combine Broadview with Tyco's ADT security business. The cash and stock transaction is valued at $42.50 per share or approximately $2.0 billion. The transaction has been unanimously approved by the board of directors of each company. The transaction combines two of the premier companies in the North American residential and commercial security industry. Broadview Security is one of the leading monitored security companies in North America. ADT is the world's largest electronic security provider. Tyco intends to combine the two businesses under the ADT name. 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. "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," said Tyco Chairman and Chief Executive Officer Ed Breen. "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 Chief Executive Officer of Broadview said, "We are proud of all we have achieved as a company to increase our customer base, and to grow our revenue and income in a challenging economy. 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." "ADT and Broadview are an excellent strategic fit. We have highly complementary product and service offerings, strong sales and marketing organizations and a shared dedication to quality customer service," said Naren Gursahaney, President of ADT Worldwide. "We expect 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. TRANSACTION TERMS Under the terms of the agreement, for each Brink's Home Security Holdings share, Brink's Home Security Holdings 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. The transaction is expected to close in the second half of Tyco's fiscal year, which began on September 26, 2009. The transaction is subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Act and the approval of Brink's Home Security Holdings shareholders.


Ahem ahem antitrust concerns ahem ahem.

Hi CameraMan!
There was a question during this morning's Tyco investor call about this issue and IMS Research put out a press release today saying that the combination of ADT and Broadview would give ADT "over half of the residential alarm monitoring services market in North America." I'll be doing some more reporting on this, but the over-50-percent number doesn't jibe with what Tyco said this morning. In response to a question about market share this morning, Tyco CEO Ed Breen said that ADT currently has 20-22 percent of market share and that Broadview is "about one-fifth of our size." That adds up to 25 to 29 percent. "There are thousand of alarm company competitors out there and they are in every market we have," Breen said. Breen's estimate is pretty close to another estimate I happen to have on hand. At the last year's Barnes Buchanan conference, Michael Barnes estimated that ADT has 23.7 percent of the market share and Broadview (Brink's at that time) has 4.4 percent. He noted, at the time that ADT's percentage "is down a lot" because of new data he had access to. (Barnes had ADT at 29.7 percent in 2007 and in 2008, he had them at 29.2). No doubt about it, ADT's got a big ole chunk of the market, I'll be interested to find out how IMS came up with its 50 percent number. I'll let you know what I find out, and let me know what you hear.

ADT gives an impression of ubiquity, and so does Brinks, or whatever they're calling themselves nowadays. I'd be suprised to learn that ADT only has a 25% market share.

Unless, of course, ADT is calculating it as (number of housholds in the US) + (number of commercial buildings in the US) / (number of housholds with ADT alarms) + (number of commercial buildings in the US) = 25%, whereas IMS is figuring (number of burglar alarms installed in the US) / (number of current ADT customers) + (number of current Broadview customers) = 50%.

Tuesday was a sad day for the industry. Broadview has built a business model that will be torn down by big blue. The code of ethics Broadview and its dealers display is unmatched. If tycos board members want to create a financial gain from this move they will eliminate its current dealers and branches and allow the talented employees of Broadview to take over its struggling residential division. Broadview being 90percent residential would only make sense.

This would be a perfect opportunity for Honeywell to step up to the plate.

I could not agree more with "concerned". Tyco will lose fifty percent of broadview customers once brinks non compete runs out. Dont forget brinks has already prepared a rebirth by purchasing ICD security solutions earlier this year.

I just don't understand this madness. As a former employee of Brinks/Broadview, I must say that they have the best service towards customers that I have ever seen in my life. If I didn't have to relocate with my spouse, I am quite sure I would still be there. I believe that service towards the customers is great because they treat their employees great. If employees are happy then that will make the job more desireable. I still keep in contact with many ex coworkers and they are siimply devastated by this move. Of course many Broadview workers will get laid off due to GREED. Many people left ADT to come to Briniks due to the superior customer service and I am sure there will be more than enough customers to defect to smaller companies because of the move as well. Wow, I will keep my prayers for all of my friends there because the unknown factor is surely killing them.

Brinks was my home as a Tech. I have never loved a company like this one. There is NO COMPANY LIKE THIS ANYWHERE. People here care about the customers and employees. It's is not about a $. Creating Customers for Life is not just a model, it is the staple that is practiced everyday. To destroy this model would be idiotic. This company is built on employees that operate as a family. I don't think ADT operates in this manor. There approach seems cold and all about bussiness. Respect for the company starts from the smallest employee to the Biggest. The best part of Brinks is that CEO and Executives treat the Techs, Sales and Operating staff like Superstars which makes them work as hard as they can for a company that they truly BELIEVE IN. Remember that and your company will succeed.

Word on the street is tyco squashed the Broadview deal and is going after Protection One to security a lesser percentage of the market share. Avoiding anti trust laws?