ADT Inc. (NYSE: ADT) announces it has signed an agreement to acquire Sunpro Solar, ranked #2 by Solar Power World 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.
“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,” says Jim DeVries, ADT president and CEO. “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.”
Founded in 2008, Sunpro is a leading 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 its 3,600-person, full-time workforce of solar energy professionals with 56 locations in 22 states.
Sunpro has been growing quickly, with a 90% 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, according to the company. The transaction price represents 10x estimated standalone next twelve months’ EBITDA.
The cash portion of the proceeds are 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.
“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,” says Sunpro Founder Marc Jones. “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.”
ADT Solar to Provide Both Strategic and Financial Benefits
ADT says the acquisition will provide the following strategic and financial benefits:
- 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 a 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, prior to 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.
“We’re excited to offer consumers even more peace of mind by giving them the opportunity to power their homes with sustainable and affordable solar energy. Residential solar represents a $15 billion annual market, but still only in 3% of all U.S. homes,” adds DeVries.
“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.”
The completion of the transaction is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close by year-end 2021.
This article originally appeared on our sister publication Security Sales & Integration‘s website.
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