Diversified manufacturer Tyco International Ltd. has agreed to acquire Brink's Home Security Holdings Inc. in a cash-and-stock deal worth $2 billion, the companies said late Monday.
Tyco said it is paying $42.50 per share for the Irving, Texas-based provider of home security services, representing a premium of more than 35 percent over Brink's stock, which closed Friday at $31.42.
Tyco, which is headquartered in Schaffhausen, Switzerland, said it will combine Brink's with its own ADT security business. The deal has been unanimously approved by board members at both companies, they said.
Tyco said the purchase of Brink's strengthens its position in the residential and commercial security industry.
Under the deal, Brink's shareholders will have the option to receive $42.50 per share, a combination of cash and Tyco stock or shares of Tyco alone. Tyco expects the deal to close in the second half of its fiscal year, which began Sept. 26.
The purchase will increase Tyco's earnings by 7 cents per share starting the first full year after closing, Tyco estimated. Earnings will then increase by 14 cents per share after two years. The estimates exclude special items.
Brink's, which does business as Broadview Security, has 1.3 million recurring revenue accounts in North America with annualized revenue of about $565 million. ADT, a much larger player, has more than 7.4 million accounts globally and generated $7 billion in fiscal 2009.
Following the announcement, Tyco hiked its first-quarter earnings forecast. The company said it now expects to earn between 63 cents and 65 cents per share, excluding items. That compares to its previous forecast of between 48 cents and 50 cents per share.
It now expects $4.25 billion in revenue, up from its earlier estimate of $4.1 billion.
Wall Street analysts surveyed by Thomson Reuters expect 50 cents per share on $4.15 billion in revenue. Such estimates typically exclude special items. Tyco is scheduled to report first-quarter earnings on Jan. 28.
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