Tyco agrees to buy ADT for $5.6 billion
the biggest US burglar-alarm company, for $5.6 billion in a deal that would block a hostile bid from Western Resources Inc.
Tyco said the combination, announced yesterday, represents a continuation of its effort to expand into service businesses. The diversified manufacturer will pay stock for ADT, which has already rejected an offer from Western, the big Midwest utility that is its largest shareholder.
ADT has been the focus of significant takeover interest. The Western offer, first launched on December 18, followed by less than three months the breakup of an ADT buyout by Republic Industries Inc.
"We believe that the combined operations of ADT and Tyco's Fire and Safety Services group will greatly enhance our ability to serve our industrial and commercial customers,'' said L. Dennis Kozlowski, chairman and chief executive of Tyco.
ADT shares jumped 15 percent on the news.
The electronic security business is in wide demand as it offers an entry into consumers' households, where companies can sell other products. Western Resources saw similar advantages.
Michael A. Ashcroft, ADT's chairman and CEO, said the combination "will enhance ADT's ability to continue its growth, not only in North America and the United Kingdom, but in all parts of the world utilising Tyco's established infrastructure''.
Tyco, which has no relationship to Tyco Toys Inc., makes a variety of products including disposable medical goods, packaging materials and electronic components. Once the deal is completed, Tyco shareholders will own 64 percent of the combined company.
"This transaction represents the best opportunity for current ADT shareholders,'' Ashcroft said.
The deal, which will produce a combined company with more than $8.5 billion in annual revenue, follows a public battle with Western, which owns 27 percent of ADT's stock.
ADT in January rejected Western's $22.50 a share cash and stock bid for the shares it doesn't already own and said it would urge its shareholders to also reject the offer. At that time, Western stated it believed the offer for ADT was fair and would continue to pursue it. Earlier this month, Western raised the cash portion of its bid to $10 a share from $7.50 but left the overall value unchanged. (See story below) .
Tyco's deal amounts to $29 a share for ADT, based on its closing price Friday, before the takeover was announced.
The boards of both ADT, which has its headquarters in Boca Raton, Florida, and Tyco, headquartered in Exeter, New Hampshire, have approved the combination, which is expected to be completed by July 1. Approval by the shareholders of both companies as well as regulators is required.
A telephone message seeking comment from Western Resources, which is based in Topeka, Kansas, was not immediately returned.
