ADT Inc., No. 1 on the SDM 100 Report, today announced that it entered into a definitive agreement to sell ADT Security Services Canada Inc. to TELUS Corporation for approximately CAD $700 million in cash, subject to certain adjustments. The transaction comprises all of ADT Canada’s operations and assets.
“Opportunities continue to develop for ADT in the areas of smart home integration, the expansion of the home security business into new demographics and ADT’s growth in commercial security,” said Jim DeVries, president and CEO, ADT. “The sale of our more capital-intensive Canadian operations enables us to sharpen our focus on the exciting growth and higher-margin opportunities in the U.S., where we can more efficiently invest our time and resources. Importantly, these emerging opportunities are ideal for leveraging the trusted ADT brand as we continue generating strong free cash flow to drive shareholder value over the long term.”
For the fiscal year ended December 31, 2018, ADT Canada generated revenue of USD $229 million.
The company also announced that its board of directors authorized a one-time special dividend of up to $550 million and plans to set the dividend at $0.70 per share. The special dividend is conditioned upon the closing of the transaction and is subject to subsequent corporate action, and therefore may not be in that amount, or occur at all. Details of the special dividend, including the record date for shareholders eligible to receive the special dividend and the payment date of the special dividend, will be provided in conjunction with the closing of the transaction.
The company expects to incur a non-cash charge in the third quarter in connection with the transaction, which may be material to ADT’s earnings. ADT plans to continue to execute on its previously disclosed capital allocation framework, which balances organic investments in the business, opportunistic bolt-on M&A opportunities, returning capital to shareholders and de-levering over time.
The transaction is expected to close in the fourth quarter of 2019, subject to customary closing conditions and other business requirements, including approval of the transaction by the Canadian Competition Bureau.
RBC Capital Markets and Barclays are serving as financial advisors to ADT and Osler, Hoskin & Harcourt, LLP is serving as legal advisor.
ADT is ranked as the #1 Smart Home Security Provider by Strategy Analytics, “US Interactive Security: Self-installed, Professionally-Monitored Solutions Gaining Momentum,” April 2019. The company employs approximately 19,000 people, has more than 200 sales and service locations, and owns and operates 12 monitoring centers. Visit www.adt.com for more information.