ADT to Be Acquired by Tyco in $5.6-Billion Deal

Burglar-alarm company ADT Ltd., faced with a persistent hostile bidder, has agreed to be acquired by friendly suitor Tyco International Ltd. for $5.6 billion.

The deal, announced Monday, leaves the next step to Western Resources Inc., the big Midwestern utility that has been trying to take over ADT since December. In response to the merger announcement, Western would say only that it is studying the proposal.

“The next situation is if Western raises the price at all,” said Arnold Brief, an analyst at Southeast Research Partners, a brokerage firm. “I’m not sure how high you want to go.”

Exeter, N.H.-based Tyco, a diversified manufacturer best known as a maker of fire extinguishers, alarms and other related products, is offering $29 a share in stock for ADT. That compares with the $22.50 cash and stock bid of Western, which is ADT’s largest shareholder, with 27% of its stock.

“We believe that the combined operations of ADT and Tyco’s fire and safety services group will greatly enhance our ability to serve our industrial and commercial customers,” Tyco Chairman and Chief Executive L. Dennis Kozlowski said.

Shares of Bermuda-based ADT shares surged $3.875 to close at $25.625, while Tyco lost $2 to close at $58.25. Both trade on the New York Stock Exchange. Topeka, Kan.-based Western gained 87.5 cents to close at $31, also on the NYSE.

ADT’s electronic security arm serves 1.8 million industrial, commercial and residential customers and is the largest provider in North America and Britain. ADT also runs the second-largest used-car auction house in the United States.

The electronic security business is in demand because it offers an entry into consumers’ households, where firms can sell other products. Western Resources saw similar advantages.

Tyco has more than 300 offices in more than 50 countries. ADT has 230 offices in 10 countries.

After the merger, the combined company would have $8.5 billion in annual revenue, with more than $6 billion coming from Tyco. The company, which is not related to Tyco Toys Inc., also makes disposable medical goods, packaging materials and electronic components. Tyco shareholders would own 64% of the combined company.

ADT Chairman and Chief Executive Michael A. Ashcroft said the deal “represents the best opportunity for current ADT shareholders.”

The boards of both ADT and Tyco have approved the combination, which is expected to be completed by July 1. Approval is required by the shareholders of both companies as well as regulators.