ADT to acquire Protectron for $500 million

Imperial Capital’s John Mack: Agreed upon deal is ‘far and away’ the largest deal for ADT as independent company
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Wednesday, April 30, 2014

BOCA RATON, Fla.—In what will be its largest acquisition as an independent company, ADT has agreed to acquire Canada-based monitoring giant Protectron in a $500 million deal, giving the company another 400,000 customers north of the border. It adds 31,000 accounts, worth approximately $11 million in RMR.

The deal is subject to government and regulatory approvals and is expected to close this summer.

Protectron’s customers are 75 percent residential. The company has four central stations and 900 employees. With approximately 80 dealers, Protectron has the largest dealer network in Canada, according to Daniel Demers, Protectron president and CEO.

“This is far and away the largest deal ADT will have done since it became an independent company. It dwarfs the Devcon deal,” John Mack, EVP and managing director at Imperial Capital, told Security Systems News. Imperial Capital advised ADT on the deal.

Mack said it signals a return for ADT to “growth initiatives [through] high quality acquisitions,” and predicted it “will help ADT’s attrition profile and bolster its enhanced services sales.”

The deal gives ADT “more critical mass [that will enable ADT] to do a better job in Canada.” Protectron’s dealer and direct sales organizations bring a “nice growth engine with the ability to grow the subscriber base.”

Lee Jackson, regional vice president Canada, characterized the agreement as “the next step in our evolution in Canada.”

“We have a longstanding commitment to great customer services that dovetails perfectly with Protectron joining the ADT team,” he said. “[Protectron] has been very successful at growing and retaining their customer base with outstanding service and a great management team and dealer network.”

Jackson said ADT plans to create a “stand-alone business in Canada with a dedicated management team” to address the country’s unique market needs.

Protectron's Demers is onboard with this vision of recreating a standalone ADT in Canada, something ADT had about a decade ago.

“Naren [Gursahaney, ADT CEO] himself said he wants to recreate a standalone organization in Canada [with a separate management team] that will report to the highest level of ADT, that fact means a lot to me,” Demers  told SSN.

“ADT recognizes that our retention rate [of customers] is impressive, way higher than the standard in the industry. They want to make sure we keep doing that,” Demers said. “And not only is our dealer network the largest in Canada. It’s the most innovative and ADT recognizes that. I’m excited about this deal because it’s a great opportunity for us going forward.”

Protectron has four central stations in Canada, while ADT has two (with redundancy built in from the company’s U.S. facilities, Jackson noted). With the agreement in its early stages, Jackson said it was still too early to say whether or not ADT would keep all six Canadian centrals in operation. Jackson also said ADT has yet to determine which resources and administrative functions it will transfer to Canada to support its expanded account base.

ADT uses its proprietary product Pulse in the U.S., while Protectron sells both Alarm.com and Honeywell’s Total Connect.  Demers reinforced that the acquisition is subject to government approval and “up until this happens, it’s business as usual.”  Once the deal is approved “these two great organizations will look at how we go to market and what products and solutions we’ll use,” Demers said, adding that ADT is interested in building on successes that Protectron has had.

Jackson said that while the demands of the customer base will dictate which products ADT will offer in Canada, the company as of now has no plans to change its service offerings or those of Protectron.

Martha Entwistle contributed to this report