ADT gets a big boost from State Farm and Google deal
By Paul R. La Monica, CNN BusinessUpdated: Tue, 06 Sep 2022 14:56:40 GMTSource: CNN BusinessIt looks like Jake from State Farm won't need to worry about protecting his home from burglars. The ins
By Paul R. La Monica, CNN BusinessUpdated: Tue, 06 Sep 2022 14:56:40 GMT
Source: CNN Business
It looks like Jake from State Farm won't need to worry about protecting his home from burglars. The insurance giant announced a big investment in home security company ADT Tuesday. Shares of ADT soared more than 14% on the news in early trading.
State Farm is making a $1.2 billion investment in ADT, a deal that will give State Farm a 15% stake in the company. State Farm is buying ADT shares at a price of $9, a nearly 25% premium to where the stock closed on Friday.
State Farm also said it will commit $300 million specifically to help fund product innovation and marketing.
"These new and expanded partnerships represent another bold step forward for our company and provide ADT more avenues to grow our customer base, strengthen brand loyalty and lower customer acquisition costs," said ADT president and CEO Jim DeVries in a press release.
State Farm Chief Operating Officer Paul Smith added in the release that the deal with ADT "gives State Farm the opportunity to provide smart home technology that takes us from our 'repair and replace' model to a 'predict and prevent' mindset." Smith will join ADT's board as part of the investment.
Tech giant Google is also expanding an existing partnership with ADT and is putting in an additional $150 million for connected home investments. Google parent Alphabet owns the Nest smart home brand of thermostats and other connected products. Google bought a 6% stake in ADT back in 2020.
"A smart home should take care of the people in it while also helping to make sure they are protected and safe," said Rishi Chandra, vice president and general manager of Google Nest, in the statement. "Our work with ADT is building the next generation of smart home security solutions."
The State Farm and Google deals also have the blessing of ADT's majority shareholder, private equity firm Apollo Global Management.
