By Jun Ji-hye
SK Telecom (SKT) has joined a battle to take over security monitoring and dispatch service provider ADT Caps, in an apparent move to reach out to non-telecommunications businesses to escape telecom market saturation.
ADT Caps, the second largest security platform provider in Korea, is now on sale. Its sales value is estimated at about 3 trillion won or $2.8 billion, the biggest in terms of price of its kind among mergers and acquisitions (M&A) this year.
SKT, the country's top mobile carrier, seeks to close the deal with Macquarie Infrastructure and Real Assets through a consortium, as the company plans to reduce its financial burden during the acquisition process.
SKT has submitted the acquisition proposal to Morgan Stanley, a sales adviser of U.S.-based private equity fund Carlyle Group, sources familiar with the issue said, Wednesday.
Carlyle Group bought ADT Caps from U.S.-based Tyco International for about 2 trillion won in 2014. Carlyle began the process to sell the security company at the end of last year in a bid to retrieve its investment.
"SKT has consistently showed its interest in the acquisition of ADT Caps," one of the sources said. "Considering a steady increase in sales and business profits of ADT Caps, SKT has probably made a decision to participate in the bid this time as the price for the takeover is expected to become more and more expensive afterward."
Last month, a consortium led by global private equity firm CVC Capital Partners submitted a bid to acquire a 100 percent stake in ADT Caps from Carlyle.
With a consortium of Macquarie and SKT joining in, the takeover battle is becoming a two-way race.
SKT is pushing to acquire ADT Caps based on the belief it could create synergy between the mobile communication and security businesses.
ADT Caps' competitive position in the core business and rosy business outlook may have been an attractive factor for SKT as well.
According to market researcher, Euromonitor International, ADT Caps had an 11 percent market share in 2016, followed by KT Telecop with a 2.6 percent share. Euromonitor noted the market size of security services is forecast to increase from 4.6 trillion won this year to 4.7 trillion won in 2019 and to 5 trillion won in 2022.
Carlyle will reportedly select and announce a preferred bidder soon after comparing conditions and prices suggested by the two consortiums.
As part of efforts to take the leadership in the era of the Fourth Industrial Revolution, the mobile carrier aims for a lion's share in business segments related to artificial intelligence (AI) and internet of things (IoT).
SKT's rationale is that the acquisition, if it gets done, could help it create new services and business models by connecting its advanced technologies to the security business. The company appears to have been already working out a strategy for developing the next-generation security business by setting up a taskforce team in September.
SKT has continued expanding its bases in the AI sector by releasing its AI platform NUGU in September 2016. The firm also opened an AI business unit under the direct supervision of its CEO Park Jung-ho.
At a mobile tech fair in Barcelona last year, the top company executive said the firm was planning to benchmark e-commerce giant Amazon for business diversification, vowing to be a new high-tech company.
SKT was the first to roll out an AI speaker in Korea and revealed T Map x NUGU, a next-generation navigation service combined with its AI platform. Then, the firm used its voice-powered AI assistant for its IPTV Btv, aiming to expand its AI platform.
In January, the firm also launched a 200-member taskforce team dedicated to preparing for the launch of its 5G service at the earliest possible date. The team is led by Suh Sung-won, head of the mobile network operation (MNO) division, and comprised of staff from four major divisions ― MNO, media, IoT /data and service platforms.
SK Telecom (SKT) has joined a battle to take over security monitoring and dispatch service provider ADT Caps, in an apparent move to reach out to non-telecommunications businesses to escape telecom market saturation.
ADT Caps, the second largest security platform provider in Korea, is now on sale. Its sales value is estimated at about 3 trillion won or $2.8 billion, the biggest in terms of price of its kind among mergers and acquisitions (M&A) this year.
SKT, the country's top mobile carrier, seeks to close the deal with Macquarie Infrastructure and Real Assets through a consortium, as the company plans to reduce its financial burden during the acquisition process.
SKT has submitted the acquisition proposal to Morgan Stanley, a sales adviser of U.S.-based private equity fund Carlyle Group, sources familiar with the issue said, Wednesday.
Carlyle Group bought ADT Caps from U.S.-based Tyco International for about 2 trillion won in 2014. Carlyle began the process to sell the security company at the end of last year in a bid to retrieve its investment.
"SKT has consistently showed its interest in the acquisition of ADT Caps," one of the sources said. "Considering a steady increase in sales and business profits of ADT Caps, SKT has probably made a decision to participate in the bid this time as the price for the takeover is expected to become more and more expensive afterward."
Last month, a consortium led by global private equity firm CVC Capital Partners submitted a bid to acquire a 100 percent stake in ADT Caps from Carlyle.
With a consortium of Macquarie and SKT joining in, the takeover battle is becoming a two-way race.
SKT is pushing to acquire ADT Caps based on the belief it could create synergy between the mobile communication and security businesses.
ADT Caps' competitive position in the core business and rosy business outlook may have been an attractive factor for SKT as well.
According to market researcher, Euromonitor International, ADT Caps had an 11 percent market share in 2016, followed by KT Telecop with a 2.6 percent share. Euromonitor noted the market size of security services is forecast to increase from 4.6 trillion won this year to 4.7 trillion won in 2019 and to 5 trillion won in 2022.
Carlyle will reportedly select and announce a preferred bidder soon after comparing conditions and prices suggested by the two consortiums.
As part of efforts to take the leadership in the era of the Fourth Industrial Revolution, the mobile carrier aims for a lion's share in business segments related to artificial intelligence (AI) and internet of things (IoT).
SKT's rationale is that the acquisition, if it gets done, could help it create new services and business models by connecting its advanced technologies to the security business. The company appears to have been already working out a strategy for developing the next-generation security business by setting up a taskforce team in September.
SKT has continued expanding its bases in the AI sector by releasing its AI platform NUGU in September 2016. The firm also opened an AI business unit under the direct supervision of its CEO Park Jung-ho.
At a mobile tech fair in Barcelona last year, the top company executive said the firm was planning to benchmark e-commerce giant Amazon for business diversification, vowing to be a new high-tech company.
SKT was the first to roll out an AI speaker in Korea and revealed T Map x NUGU, a next-generation navigation service combined with its AI platform. Then, the firm used its voice-powered AI assistant for its IPTV Btv, aiming to expand its AI platform.
In January, the firm also launched a 200-member taskforce team dedicated to preparing for the launch of its 5G service at the earliest possible date. The team is led by Suh Sung-won, head of the mobile network operation (MNO) division, and comprised of staff from four major divisions ― MNO, media, IoT /data and service platforms.
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