ADT Inc., a smart home and small business security brand, and State Farm announced that State Farm will make a $1.2 billion equity investment in ADT. This will result in State Farm owning approximately 15 percent of ADT after the equity investment and the tender offer close. Additionally, ADT plans to partner with State Farm and build upon its existing relationship with Google with the aim to expand opportunities to combine security, smart home technology and risk-mitigation capabilities to monitor, detect, prevent and optimize against homeownership risks.
State Farm will commit up to $300 million to fund product and technology innovation, customer growth and marketing. In addition, Google has separately agreed to commit an incremental $150 million, subject to the achievement of certain milestones, to advance opportunities created by this type of innovation, raising its total success fund commitment to $300 million.
At its investor day earlier this year, ADT showcased a customer-focused safety and innovation strategy. The company, along with State Farm, aims to create a comprehensive solution across home and mobile safety to help customers recover from unexpected risks with proactive safety and security.
ADT envisions customer benefits that may include an integrated security, protection and smart home service that monitors, detects, prevents and optimizes against homeownership risks; lower homeowners insurance premiums through safe homeowner discounts for homes equipped with ADT smart home security systems and powered by Google devices; and reduced claim frequency and severity with proactive protection through ADT’s patented SMART monitoring technology that helps protect against damage from water, fire, intrusion and other homeownership risks.
State Farm has agreed to make a $1.2 billion investment in ADT to acquire 133.3 million shares of ADT’s common stock at $9 per share. With their investment, State Farm will obtain a seat on ADT’s board of directors and intends to designate Paul Smith, executive vice president and chief operating officer of State Farm. State Farm’s equity investment, which is subject to customary closing conditions, is expected to close early in the fourth quarter of 2022.
In connection with State Farm’s equity investment, ADT will be commencing a self-tender offer for up to 133.3 million shares of its outstanding common stock and Class B common stock at $9 per share, to be funded by the proceeds from the State Farm equity investment. The tender offer is expected to eliminate any dilution from State Farm’s equity investment. Funds managed by affiliates of Apollo Global Management Inc., ADT’s majority shareholder, have committed to backstop the entire offering to ensure that it is fully subscribed. Google, the only holder of ADT’s Class B common stock, will not tender any of its shares. After the equity investment and tender offer close, State Farm will own approximately 15 percent of ADT, and Google will continue to own a 6 percent stake (on an as-converted basis) in ADT.
Citi and Evercore were the financial advisors to ADT, and Cravath, Swaine & Moore LLP acted as legal advisor. Morgan Stanley & Co. LLC was the financial advisor to State Farm, and Sidley Austin LLP acted as legal advisor.
Sapiens International Corporation, a global provider of software services for the insurance industry, announced that AEGIS, a mutual insurance company, has selected Sapiens ReinsurancePro to enhance its internal controls processes, automated calculations and reporting. Sapiens ReinsurancePro replaces AEGIS’ combination of disparate custom applications and spreadsheets to streamline and optimize processes.
AEGIS is a mutual insurance company that provides liability and property coverage, as well as related risk management services, to the energy industry.
Sapiens International Corporation aims to empower the financial sector, with a focus on insurance, to transform and become digital, innovative and agile. Backed by 40 years of industry expertise, Sapiens offers a complete insurance platform with pre-integrated, low-code solutions and a cloud-first approach to assist customers’ digital transformation.
Beazley, a sustainable specialist insurer, announced a new online portal service for its Weather Guard product.
The new online portal, created in partnership with Paragon, aims to provide faster service with no change to the cover, limits or specific weather perils. Weather Guard will continue to be written on Beazley’s admitted paper and Weather Guard claims will still be handled by its claims team.
Paragon, a diversified managing general agency launched in 2014, supplies coverage alternatives and options to retail brokers, insurance carriers, reinsurers and vendor companions. The agency, owned by Galway Holdings, writes comprehensive coverages throughout more than 20 programs.
Beazley plc is the parent company of specialist insurance businesses with operations in Europe, the U.S., Canada, Latin America and Asia. Beazley manages six Lloyd’s syndicates, and Beazley’s underwriters in the U.S. focus on writing a range of specialist insurance products. In the admitted market, coverage is provided by Beazley Insurance Company Inc. In the surplus lines market, coverage is provided by the Beazley syndicates at Lloyd’s. Beazley’s European insurance company, Beazley Insurance dac, is regulated by the Central Bank of Ireland.
Sources: ADT Inc., Sapiens International Corporation, Beazley