ADT Inc., a pioneer brand in smart home and small business security, announced an agreement to acquire Sunpro Solar (Sunpro), ranked #2 for 2021 Top Residential Rooftop Solar Contractors in the U.S., for $160 million in cash plus approximately 77.8 million shares of ADT common stock, implying a total enterprise value of approximately $825 million, subject to certain adjustments.
ADT will rebrand Sunpro to “ADT Solar™” and enter the rooftop solar business to offer ADT customers a protected, connected, and now powered home.
Integrated home experience
“With its strong focus on the customer, Sunpro is the perfect partner for ADT and a logical extension of our ecosystem, unlocking an integrated home experience that includes security, automation, and energy management,” said Jim DeVries, ADT President, and Chief Executive Officer.
“By combining a cash-flow-positive company in the high-growth solar space with ADT’s trusted brand, national footprint, and cross-sell potential, we can expand offerings to our customers and accelerate growth for both ADT and ADT Solar.”
Sustainable solar energy
We offer consumers peace of mind by powering their homes with sustainable and affordable solar energy"
“We’re excited to offer consumers even more peace of mind by allowing them to power their homes with sustainable and affordable solar energy. Residential solar represents a $15 billion annual market, but still only in 3 percent of all U.S. homes,” DeVries continued.
“With more than 6 million ADT customers and our best-in-class sales force and marketing channels, we will be well-positioned to further scale ADT Solar while lowering customer acquisition costs and accelerating overall solar adoption. We believe we have the potential to grow ADT Solar into a multi-billion-dollar business over time as we meaningfully increase the accessibility and penetration of residential solar across America.”
Solar power systems
Founded in 2008, Sunpro is a provider of rooftop solar systems in the United States. Sunpro markets, designs, sells, installs, and maintains solar power systems on residential and commercial properties through their 3,600-person, full-time workforce of solar energy professionals with 56 locations in 22 states.
The company has been growing quickly, with a 90 percent year-over-year increase in installs in 2020, and has a cash-flow-positive, asset-light business model with more than four consecutive years of positive EBITDA.
Building ADT’s future
The transaction price represents 10x the estimated standalone next twelve months’ EBITDA. The cash portion of the proceeds is expected to be used for debt reduction and sellers’ taxes. Nearly all of the sellers’ consideration is in ADT stock, reflecting their conviction in ADT’s future growth.
Sunpro founder Marc Jones and the Sunpro management team are expected to join ADT to help build ADT Solar into the U.S. rooftop solar industry leader.
Renewable energy solutions
ADT will help accelerate our ability to bring residential and commercial rooftop solar to more customers"
“Becoming part of the ADT family will accelerate our ability to bring residential and commercial rooftop solar to more customers, helping them save money and also become more energy independent,” Marc Jones said.
“With our shared mission to further advance smart home technologies and renewable energy solutions for customers, our expansion will make a meaningful difference in how our customers live daily.”
Strategic and financial benefits of the transaction
- Increasing total addressable market: With a larger presence in the home automation and energy management markets, ADT to expand its consumer offerings, leading to an increase in its total addressable market.
- Immediate brand and market leadership position: Residential solar is a highly fragmented industry without a clear and trusted brand leader, such as ADT. ADT Solar will immediately become a leading national residential solar installer.
- Superior customer acquisition and cross-selling: ADT’s trusted brand, national footprint, and reach into 6 million homes should enable strong, efficient solar customer lead generation and low-cost acquisition relative to competitors. ADT’s field team visits 10,000 households per day and has a salesforce of more than 3,000 people, creating the opportunity for substantial cross-selling between security and solar customers.
- Leverage the national network of strong partnerships: ADT Solar should also benefit from ADT’s broad, national network of homebuilders, ADT Authorized Dealers, and retailers, and will have new opportunities to create additional mutually beneficial relationships to expand its distribution network.
- Expands ADT’s presence in the home: Customers will benefit from a single, trusted supplier that can offer a complementary suite of security, smart home, and solar products and services.
- Earnings and cash flow positive: Transaction is expected to be positive to EBITDA and free cash flow immediately and accretive to EPS within the first 12 months, before any synergy realization.
- Limited balance sheet impact: As part of the acquisition, ADT will assume approximately $20 million in vehicle loans and leases; all other existing Sunpro debt will be retired with the cash proceeds received from ADT at closing.
The completion of the transaction is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close by year-end 2021.
Transaction advisors
Citi is serving as financial advisors to ADT, and Morgan, Lewis & Bockius is serving as legal advisor to ADT. Deutsche Bank Securities Inc. is serving as a financial advisor to Sunpro, and Vinson & Elkins is serving as a legal advisor to Sunpro.
