state farm: This home security firm has secured more than USD1.5 billion investment from State Farm, Google 

Home-security firm ADT Inc has secured an investment of USD1.2 billion from State Farm as part of a partnership that it hopes will encourage the insurer's many customers to buy its smoke detection and anti-intrusion products.

The company said on Tuesday State Farm would purchase 133.3 million shares, or a near 15% stake, at USD9 apiece and get a seat on its board. That will make the closely owned insurer its second-largest investor after Apollo Global Management.

ADT Shares surged 10% in early trading as the company will also receive another USD150 million for product development from existing investor Google, the Alphabet Inc-owned search giant that took a 6% stake in ADT in 2020.

"These new and expanded partnerships ... provide ADT more avenues to grow our customer base, strengthen brand loyalty and lower customer acquisition costs," Chief Executive Officer Jim DeVries said in a statement.

State Farm, which has 13.7 million customers with homeowner insurance, will also spend up to USD300 million to aid product development, customer growth and marketing.

ADT had 6.6 million recurring revenue customers as of the end of last year.

The company said it was planning to avoid dilution from the State Farm investment by using the proceeds to buy back up to 133.3 million shares of its stock at USD9 apiece.

Its financial advisers on the deal were Citi and Evercore, while Morgan Stanley & Co LLC was the financial adviser for State Farm.

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