Alphabet Inc.’s Google is expanding its reach into the home-security business by buying a $450 million stake in ADT, the Florida-based provider of security and smart-home solutions.
Google announced Monday (Aug. 3) that it's entered into a long-term partnership with ADT to create what the companies are calling the next generation of smart-home security offerings. Under terms of the agreement, Mountain View, Calif., based Goole will pay $450 million for a 6.6 percent ADT stake.
Shares of ADT soared as much as 99.9 percent intraday to $17.21 on the news, but later pulled back to $14.47 shortly before noon ET, up 68 percent on the day.
The companies said they will integrate Google’s hardware and services into ADT’s products and its more than 20,000 professionals. Google and ADT also said they will provide an additional $150 million for marketing, product development, technology and employee training if certain unspecified milestones are reached.
The deal will widen the potential reach for Google’s own smart-home devices, led by its Nest offering. In 2014, Google bought Nest, the hardware company behind Nest Cam and the Nest thermostat, for $3.2 billion to enter the smart-home security market.
Now, Monday's deal between Google and ADT will combine Nest’s hardware and services with ADT’s installation, service and monitoring network to create what the companies said would be a more helpful smart home and integrated experience for customers.
The deal means ADT will exclusively sell Google's Nest smart home products, though corporate clients will still have the option for other products, according to a report in the Financial Times.
“The combined solution will unlock access to new customers seeking premium technology, end-to-end smart-home services and trusted security,” ADT CEO Jim DeVries said. “Together the smart home and secure market represents a tremendous opportunity for ADT and Google.”
Rishi Chandra, Nest’s general manager and vice president, said the partnership will further its mission of building helpful devices for the home.
“ADT is a leader in smart home security, and I look forward to working with the team to create innovative smart home security solutions that help everyone feel safe and protected,” Chandra said.
ADT said it expects to offer certain Google devices to its customers starting this year and to expand the integration next year.
In May, Nils Mattisson, CEO of Minut, a home security device maker that does not rely on cameras, told PYMNTS his company’s approach is different from other security setups because it relies on sound rather than images to protect privacy.