Telco Telus to Buy ADT’s Canada Unit for $527 Million

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(Bloomberg) -- Telus Corp., one of Canada’s largest telcos, agreed to buy ADT Inc.’s operations in the country in a effort to expand its home and business security unit.

Telus will purchase ADT Security Services Canada Inc. for about C$700 million ($527 million), according to a company statement. The Canadian unit of Boca Raton, Florida-based ADT will add about 500,000 customers and about 1,000 employees to Telus. The transaction is expected to close in the fourth quarter.

As of the third quarter, Telus expects to have added more than 12,000 new customers to its security business, bringing the total to about 100,000, prior to the acquisition. Telco rivals Rogers Communications Inc. and BCE Inc. have established security monitoring businesses as well.

“Security and automation clearly represent areas that can be monetized as part of a bundle for businesses but also consumers in the context of health and home,” Adam Shine, analyst at National Bank of Canada, said in a note. “Related solutions will find their way into smart cities, buildings, and enterprise with coming 5G serving as the great enabler to all these things.”

Telus plans to report its third quarter results on Nov. 7.

Telus shares rose about 1% to C$47.60 at 2:24 p.m. in Toronto while ADT rose 1.9% to $6.39 in the U.S.

What Bloomberg Intelligence Says:

“ADT’s agreement to sell its Canadian operations (5% of sales) for about $527 million to Telus should give a short-term boost to shareholders via a 70 cents-a-share special dividend, yet it also highlights domestic competitive pressures. While the sale will allow ADT to focus more on the U.S. market, the move doesn’t significantly alter elevated leverage of more than 4x net debt to Ebitda.”

-- Eshan Toorabally, BI industry analyst

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