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The acquisition comes as telecom companies seek to expand their business beyond the mostly saturated wireless, phone and television markets
Canadian telecommunications company Telus Corp. has expanded its security business by buying the local operations of ADT Inc. for about $700 million.
The cash deal, expected to close by the end of the year, builds on Telus’ acquisition of BCE Inc.s’ Alarm Force customers in the west for $66.5 million last year. ADT Canada generated US$229 million in revenue in 2018, the company said.
“This acquisition furthers Telus’ commitment to leverage the power of technology to bring state-of-the-art convenience, control and safety into the lives, homes and businesses of more Canadians,” Telus said.
The acquisition comes as telecommunications companies seek to expand their business beyond the mostly saturated wireless, phone and television markets in developed countries to new avenues such as the so-called internet of things (IOT) where house security, heating and appliances are controlled remotely.
Telus said the move builds on its SmartHome Security and Secure Business started last year, supporting a strategy of using its PureFibre networks “to enhance connected home, business, security, IOT, cybersecurity, smart buildings, smart cities and health services for its customers in Canada.”
The transaction also allows Boca Raton, Florida-based ADT to shed its capital intensive Canadian operations to concentrate on the U.S. market “where we can more efficiently invest our time and resources,” ADT president and CEO Jim DeVries said in a statement.
“Opportunities continue to develop for ADT in the areas of smart home integration, the expansion of the home security business into new demographics and ADT’s growth in commercial security,” DeVries said. “Importantly, these emerging opportunities are ideal for leveraging the trusted ADT brand as we continue generating strong free cash flow to drive shareholder value over the long term.”
ADT said it would use money from the sale as a special dividend of as much as US$550 million to its shareholders at 70 U.S. cents a share. It also said it expects to incur a non-cash charge in the third quarter which may be material to its earnings.
Telus expects to have 100,000 customers in its security business this quarter before the ADT acquisition. The unit will join some 14 million customers across wireless, voice, data, TV, entertainment and video, while helping the company’s health strategy, Telus said.
“This includes enabling Canadians with remote patient care with home health monitoring and helping Canadians, notably elderly citizens, enjoy their independence with secure, connected technology in the comfort of their own home,” Telus said.
Copyright Postmedia Network Inc., 2019