Share prices of home and business security tech company ADT jumped by more than 80 percent on Monday after the company announced that it was entering into a partnership with Alphabet's Google. The aim of the partnership will be to build next-generation smart home security products that will utilize both company's technologies and expertise.
ADT stock prices opened at $13.89 per share on Monday from a closing price of $8.61 per share last week. The stock traded as high as $15.18 per share during the day before closing at $13.48 per share.
As part of the new venture, Google has agreed to invest around $450 million and take a 6.6 percent stake in ADT by buying some of its Class B common stocks. Both companies will also be setting aside $150 million each to fund the venture, which will involve the development of new products and technologies.
Google will be contributing its Nest hardware and technologies, while ADT will provide its installation and professional monitoring network. ADT is committing 20,000 of its employees to work directly with Google in further developing its suite of home security hardware and vertical technology stack.
Once the deal is completed, ADT is expected to begin selling Google devices along with its own hardware and services. Both companies are mainly targeting private homes and small businesses with their combined products. Department heads from both sides are expected to convene in a meeting this week to further discuss the terms and scope of the new venture.
According to Google, it is aiming for its Nest devices to be ADT's "cornerstone" product offering for homes and businesses. The company added that its technology coupled with ADT's extensive experience and network should provide customers with superior event detection, fewer false alarms, and a more comprehensive suite of products to better secure their businesses and homes.
Google has been very active in the smart home security space for at least a decade. The company had offered customers various product suites and packages, including its Nest Secure modular home security system. The $399 security system includes a central hub device that is able to monitor when doors and windows are opened through various sensors.
By partnering and investing in ADT, one of the country's largest home and business security tech providers, Google should be able to significantly increase its presence in the rapidly growing market.
ADT mentioned in a statement that it currently has more than 6 million customers in the United States, all of which should soon be able to get direct access to Google's products such as its Nest Aware subscription service. In 2017, ADT also established a partnership with Samsung Electronics to help develop the South Korean tech giant's SmartThings-powered home security system.
