Smart home and small business security provider ADT is now adding “energy security” to the mix and jumping into the solar market in a big way, acquiring Sunpro Solar. The deal is for $160 million in cash plus approximately 77.8 million shares of ADT common stock, (a total enterprise value of approximately $825 million). Sunpro ranks among the top U.S. residential solar contractors and will now be rebranded ADT Solar.
“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.”
Residential solar represents a $15 billion annual market, but still only in 3 percent of all U.S. homes. With more than 6 million ADT customers, ADT is in a prime spot to scale up ADT Solar, grow the solar market overall and lower those pesky customer acquisition costs.
“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,” DeVries says.
Founded in 2008, 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. The transaction price represents 10x estimated standalone next twelve months’ EBITDA.
“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,” said 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.”
With a larger presence in the home automation and energy management markets, ADT can now expand its consumer offerings, leading to an increase in its total addressable market.
Residential solar is a highly fragmented industry without a clear and trusted brand leader, such as ADT. ADT Solar has a chance to immediately become a leading national residential solar installer.
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.
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.
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.
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