SK Telecom announced that its Board of Directors held a meeting today and resolved to acquire 100 percent stake (worth KRW 1.276 trillion) in ADT Caps with Macquarie.
SK Telecom will invest KRW 702 billion to acquire 55 percent stake and management rights in ADT Caps while Macquarie will invest KRW 574 billion to purchase 45 percent stake in the company.
The SK Telecom-Macquarie consortium will take over Siren Holdings Korea, the company that holds 100 percent stake in ADT Caps.
The consortium valued Siren Holdings Korea’s Enterprise Value at KRW 2.97 trillion when considering its debt of 1.70 trillion. This equals to 11 times the amount of ADT Caps’ EBITDA (Earnings before interest, taxes, depreciation and amortization), an indicator of a company's financial performance.
Considering that in previous M&As of major global security services providers, their values were estimated at on average 11.7 times the amount of their EBITDA, Siren Holdings Korea’s Enterprise Value at KRW 2.97 trillion is a reasonable figure.
The SK Telecom-Macquarie consortium will sign an agreement with U.S.-based private equity fund Carlyle Group to buy a full stake in ADT Caps and plans to complete the acquisition as early as in Q3 2018, following a notification of corporate combination and approval seeking for the acquisition at the board of directors meeting.
ADT Caps is the country's second-largest security services provider with 570,000 subscribers. It mainly provides physical security services including access control and facilities management. The company accounts for roughly 30% of local physical security services market. In 2017, it recorded revenue of KRW 721.7 billion and operating income of KRW 143.5 billion. Backed by SK Telecom’s New ICT technology, ADT Caps is expected to grow into a next-generation security services provider.
Through the acquisition, SK Telecom will introduce New ICT technologies such as AI, IoT and Big Data to the fast-growing security services industry, so that it can provide a breeding ground for the 4th industrial revolution.
