State Farm joins Google in pumping $1.65bn in ADT smart home security

US retail insurer  State Farm will join Google in pumping some $1.65 billion into home security firm ADT in a move that puts smart-home technology further forward in the State Farm offer.

The deal "takes us from our ‘repair and replace’ model to a ‘predict and prevent’ mindset," State Farm's chief operating officer Paul Smith (pictured) has said.

State Farm expects reduced claims and smart home security devices to help proactively mitigate loss caused by water, fire, or intrusion.

State Farm will pony up $1.2 billion for a 15% stake in ADT, then invest up to $300 million in an opportunity fund to support product innovation, technology and marketing.

Google is offering an incremental conditional $150 million into a success fund, topping-up an equity commitment first made in 2020.

“ADT’s partnership with State Farm creates the capability to drive innovation in homeowners’ insurance on a broad scale," ADT's president and CEO Jim DeVries said. DeVries is counting on new revenue channels, increased brand loyalty and lower customer acquisition costs.

State Farm makes its purchase some 25% above levels at which ADT shares traded late Tuesday (September 06) ahead of the announcement.

ADT will put the proceeds to a share buy-back to avoid earnings dilution. Google will be left with a 6% stake after buy-back and State Farm with 15%.

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