Security and protection services provider The ADT Corporation (ADT) recently inked an agreement with employee-owned hedge fund sponsor Corvex Management LP to repurchase 10.24 million shares beneficially owned by it. The purchase price for each share is fixed at $44.01, which equates to the closing price of ADT on Nov 22.
The share repurchases are in sync with ADT’s accelerated share repurchase program, under which it intend to acquire approximately $400 million worth of its common stock. Between the shares already repurchased through open market transaction and the accelerated share repurchase program, the company expects to complete the $2 billion share repurchase program in the first half of fiscal 2014. As a result, the company has increased the current share repurchase authorization by an additional $1.0 billion.
Over the years, ADT has consistently returned significant cash to its shareholders through dividends and share repurchases. In concurrence with the fourth quarter fiscal 2013 earnings release, the company authorized a 60% increase in quarterly dividend to 20 cents per share, beginning with the next dividend declaration. With the recent share repurchase from Corvex, ADT has cumulatively spent $2.4 billion on share repurchases and retired over 20% of its shares since its inception.
Headquartered in Boca Raton, Fla., ADT offers electronic security products along with interactive home, business automation and monitoring services for residences and small businesses in the U.S. and Canada. The company has a strong balance sheet and a talented management team with more than 6.5 million customers.
ADT presently carries a Zacks Rank #3 (Hold). Other notable companies in the industry that warrant a look include Corporate Executive Board Co. (CEB), McGraw Hill Financial, Inc. (MHFI) and Navigant Consulting Inc. (NCI), each carrying a Zacks Rank #2 (Buy).