Thrive Holdings will pay about $7.6 billion for ADT's equity, a 45.6% premium to the stock's price on Tuesday. Funds managed by Apollo are providing all of the financing. ADT traded within 1% of the offer.
ADT's board has a month to look for a better offer. Its shareholders do not appear to be expecting one.
The home-security company agreed on Thursday to be acquired by Thrive Holdings for $10.00 a share in cash, which the companies said represents "approximately $7.6 billion in equity value and $15.3 billion in enterprise value." The price is a 45.6% premium to ADT's unaffected close of $6.87 on Oct. 27 and 52.1% above its 30-day volume-weighted average. It is 35% above Wednesday's close of $7.41.
ADT shares rose about 34% to about $9.93 in early afternoon, about 0.7% below the offer, on more than 100 million shares.
The go-shop
The agreement lets ADT solicit competing proposals until 11:59 p.m. New York time on Nov. 28, with a possible 10-day extension. ADT said it "does not intend to disclose developments with respect to the go-shop process unless and until it determines such disclosure is appropriate or otherwise required."
A spread of 0.7% on an all-cash deal expected to close in the first quarter of 2027 leaves almost nothing for the possibility of a higher bid. Merger arbitrage spreads usually reflect time and risk. This one suggests investors see little of either, and little chance of a topping offer.
Who is paying
Thrive Holdings describes itself as "a permanent capital holding company" that owns more than 75 businesses, and said ADT "will form the foundation of Thrive Holdings' smart home security business." It was formed by Josh Kushner's venture firm, Thrive Capital, according to the Wall Street Journal.
The financing is concentrated. "Financing commitments for the transaction have been solely provided by funds managed by affiliates of Apollo Global Management," the companies said. The deal has no financing condition. The size and terms of the debt have not been disclosed. The difference between the equity and enterprise values implies about $7.7 billion of existing net debt and other claims that the buyer will take on, before any new borrowing.
The case on price
ADT's board approved the deal unanimously, and Chief Executive Jim DeVries said it "delivers an attractive cash premium to our stockholders." Before the deal, its 52-week low was $6.03 and its 50-day average was about $6.88.
Before the deal, analysts had been cautious. RBC Capital had a $9 target and a sector perform rating, citing "competitive concerns from DIY providers as well as AI disintermediation concerns," and called ADT "an interesting private takeout candidate." Morgan Stanley had cut its target to $7.25.
The other side of the argument is that ADT generates substantial cash. It bought back $607 million of its own stock and paid $187 million of dividends last year, and a permanent-capital owner can hold that cash flow without a sale deadline. A buyer that sees long-term value in that cash flow is getting it at a price public investors had been unwilling to pay.
Full price or quiet bargain?
The full-price view: a premium of 45% to 52%, a price above the RBC and Morgan Stanley targets, all cash, committed financing and an open window for rivals.
The bargain view: the market is assigning almost no value to the go-shop, the buyer is a patient owner with a single lender behind it, and the stock was weighed down by worries about competition that a private owner can afford to wait out.
What comes next
Filing of the merger agreement, which will show the termination fees and any lower fee for a go-shop bidder; ADT's third-quarter results on Nov. 3; the go-shop deadline on Nov. 28; and the proxy statement's account of how the deal came together.