ASH had been struggling for some time under a mountain of debts. Its shareholders will receive 3 ADT shares for every 92 ASH shares they hold. The proposed deal implies a value of 39.3p for each ASH share, a premium of 27 per cent to the ASH closing price on Tuesday of 31p. The terms imply a similar premium of almost 30 per cent for two classes of preference share.
ASH instigated a program in 1995 to refocus its management and sell peripheral businesses. The board realised from the start that such a course of action would not be sufficient to bail it out, however, and finding a bidder was always part of the game plan of new chief executive Tony Dignum.
During discussions to sell some of its US operations to ADT, negotiations began on a full offer for the company, leading to yesterday's announcement.
Following the deal the new ADT shares to be issued will be listed on both the New York and London stock exchanges.
The takeover follows two years of heavy losses for Automated. In the year to November, ASH made a loss of pounds 7.4m on turnover of pounds 154m. In the previous 12 months it had lost pounds 11.8m. Latest figures for the first three months of the current year showed the company still in the red, losing pounds 1.3m from sales of pounds 37m.
ADT, which is incorporated in Bermuda, is focused on electronic security and car auctions. It is the largest single provider of electronic security in North America and is also a significant force in Europe.
In the year to December, ADT made profits of US$120m. About three quarters of its sales come from its security activities and, following the acquisition of ASH, the companies' activities will be merged.