Alphabet Inc’s Google is picking up a 6.6% stake in ADT Inc for $450 million with an aim to piggyback on the home security company’s strong customer base and its army of technicians in order to boost the sales of its Nest devices.
With the news reaching the market, ADT’s shares nearly doubled their value and hit a high of $17.2 trading well above their IPO price of $14 for the first time since going public in 2018, valuing the company at around $13 billion.
Google’s investment provides ADT the backing of a high-profile tech partner; it also broadens its services business. For Google, the deal allows it to tap ADT’s customer base of 6.5 million, reinforcing its presence as it continues to compete with rivals including Boston-based SimpliSafe and Amazon.com’s Ring, among others.
In a statement ADT said, both companies would work on ways to package popular Google products such as Home Mini, Nest Wifi and Nest Thermostat with ADT’s strength in installation and maintenance.
“Later this year, we will begin integrating Google devices and make them available for installations to our customers,” said ADT Chief Executive Officer Jim DeVries. “We will exclusively support Nest products”, while adding that both companies will collaborate in building products and is likely to start rolling them out next year.
Both companies have commited to allocating $150 million each for joint-marketing, product development, technology and employee training, said ADT.
As part of the deal, Google will purchase 54.7 million of ADT’s newly created Class B shares for $8.22 each with no voting rights. This was disclosed by ADT in a filing.