ADT Announces Closing of State Farm's $1.2B Equity Investment

ADT announced Thursday it closed State Farm’s $1.2 billion investment in the home security company, in a private placement of 133.3 million shares (see 2209060041). The companies said in September they planned to “revolutionize the homeownership experience” via mitigation of property losses through detection and monitoring. In addition to the equity investment of 15% in ADT, State Farm committed up to $300 million to fund “product and technology innovation, customer growth and marketing activities” associated with the partnership. State Farm has funded the first $100 million and the two companies will collaborate to approve initiatives using the funds, they said Thursday. Part of the investment includes a seat on ADT’s board; State Farm designated Chief Operating Officer Paul Smith as its representative. On a September call, ADT CEO Jim DeVries said partnering with State Farm will give ADT the chance to “capture a greater share of market by using ADT’s smart home security offerings to drive innovation in homeowners’ insurance.” A first-of-its-kind integrated offering will deliver “substantial customer value using smart home technology” to mitigate losses from water, fire and intrusion, “moving from a repair and replace model to a predict and prevent mindset," he said. As part of last month's announcement, Google committed an incremental $150 million to its existing success fund, earmarked for expanding access to smart home innovation and technologies to more customers via new sales and marketing programs. Google spent $450 million (see 2008040064) for 6.6% of ADT in August 2020 to create “the next generation of the helpful home.” ADT said it plans to repurchase up to 133.3 million shares in a tender offer that initiated Sept. 12.